December 13, 2012 / 1:57 PM / 5 years ago

Top central banks renew currency swaps as precaution

WASHINGTON (Reuters) - Top central banks around the world on Thursday renewed a series of currency swap lines set up during the 2007-2009 financial crisis as a precaution against future market strains.

Federal Reserve and New York City Police officers stand guard in front of the New York Federal Reserve Building in New York, October 17, 2012. REUTERS/Keith Bedford

The Federal Reserve said it had extended for another year the dollar swaps with the European Central Bank, Bank of Canada, Bank of England and Swiss National Bank. The announcement was released at the same time by the other central banks.

These provisions were an important part of the powerful response launched by monetary authorities during the crisis to keep financial markets open and functioning smoothly.

The Fed said the central banks had also renewed until February 1, 2014, bilateral currency swap arrangements that would also provide liquidity “should market conditions so warrant.”

The Bank of Japan separately said that it will decide on joining the extension of central bank liquidity swap arrangements at its next policy meeting, on December 19-20.

The Fed’s dollar swaps have led some political foes of the U.S. central bank to claim that it was putting taxpayer money at risk. The Fed robustly denied this claim.

Reporting By Alister Bull; Editing by Andrea Ricci

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