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US dollar funding markets during the Covid-19 crisis – the international dimension

Summary:
BIS Bulletin  |  No 15  |  12 May 2020 by  Egemen Eren, Andreas Schrimpf and Vladyslav Sushko PDF full text (663kb)  |  9 pages Key takeaways Dislocations in domestic US dollar money markets reverberated globally. Non-US banks lost a substantial part of funding from money market funds and had to borrow at shorter maturities. Nevertheless, the severity of dollar funding strains varied substantially across banks, and eased for banks from jurisdictions with standing swap lines with the Federal Reserve. The impact of policy measures to quell

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BIS Bulletin  |  No 15  | 
12 May 2020
PDF full text
 (663kb)
 |  9 pages

Key takeaways

  • Dislocations in domestic US dollar money markets reverberated globally. Non-US banks lost a substantial part of funding from money market funds and had to borrow at shorter maturities.
  • Nevertheless, the severity of dollar funding strains varied substantially across banks, and eased for banks from jurisdictions with standing swap lines with the Federal Reserve.
  • The impact of policy measures to quell the stress was felt unevenly across different funding markets. The divergence between key rates resulted in an unusual divergence of funding cost metrics, with some indicating a "dollar glut" while others a "dollar shortage".
International Settlement
The Bank for International Settlements (BIS) is an international company limited by shares owned by central banks which "fosters international monetary and financial cooperation and serves as a bank for central banks". The BIS carries out its work through subcommittees, the secretariats it hosts and through an annual general meeting of all member banks. It also provides banking services, but only to central banks and other international organizations. It is based in Basel, Switzerland, with representative offices in Hong Kong and Mexico City.

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