ABSTRACT
On December 31, 2012, a Federal Reserve program was due to expire. The “dollar swap
line” program had been put into place in 2008, during the global financial crisis. As the
crisis had spread during that year, foreign banks that had committed to making dollar-
denominated loans to their customers experienced difficulties borrowing dollar-denominated
funds in interbank markets. Under the dollar swap line program, the Fed would lend dol-
lars to other central banks, which in turn would send back to the Fed an equal amount of
funds-in terms of market exchange rates-of their currencies. Those central banks then
could stand ready to lend dollar-denominated funds to their nations’ banks that desired
them for use in making dollar-denominated customer loans.
