Where is My Swap Line?
October 20, 2008
The G-7 countries now have what amounts to access to the US Fed's window for dollars for their banks. But what of the rest of the world? Brad Setser, an analyst who writes a blog for the Council on Foreign Relations, ask some very interesting questions and points out some big holes in the world economic landscape. If you can't get dollars what does that do to your currency? This contributes to the rise in the dollar against some emerging market currencies. Setser asks: "Where is my swap line? And will the diffusion of financial power Balkanize the global response to a broadening crisis?"
You can read some of his other material at http://blogs.cfr.org/setser/. Setser is an applied international economist with experience at the U.S. Treasury and the International Monetary Fund. Currently examining central bank reserve growth, sovereign wealth funds, and the political implications of emerging market financing of the United States. Author of the recent Council Special Report, Sovereign Wealth and Sovereign Power.
John Mauldin, Editor
Outside the Box
subscribers@mauldineconomics.com
Where is my swap line? And will the diffusion of financial power Balkanize the global response to a broadening crisis?
Some emerging market central banks have noticed that they - unlike the Bank of Japan, Bank of England, Swiss National Bank and the European Central Bank - don't have access to unlimited dollar credit through reciprocal swap lines with the Federal Reserve.
Peter Garnham of the FT, drawing on…