Fed's Powell says dollar swap lines remain important tool
By Michael S. Derby
NEW YORK, July 1 (Reuters) - Federal Reserve Chairman Jerome Powell said Tuesday the U.S. central bank has no plans to change how it offers dollar liquidity to other official entities.
Speaking on the matter of the Fed's dollar swap lines system, Powell told a gathering held by the European Central Bank that "we still have the same authorities, and we're still prepared to use them in situations where it's within our legal authorities and where we think it makes sense." He added the dollar swap lines are "a big contribution" to global financial stability.
Fed dollar swap lines offer loans to eligible central banks to ensure dollar liquidity is not an issue for the global financial system and have been heavily used in times of crisis. Speaking at the same central bank event, Bank of Korea Governor Governor Rhee Chang-yong noted a need for nations like his to build up dollar reserves in case they are needed.
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