Frankfurt In view of the global corona crisis, the European Central Bank (ECB) and other large central banks want to ensure the supply of cheap dollar loans in a coordinated action. The ECB, the US central bank, the Canadian central bank, the Bank of England, Japan’s central bank and the Swiss national bank want to use existing US dollar exchange agreements, as the ECB announced late on Sunday evening.
The six central banks agreed to offer the global reserve currency with a term of 84 days in their respective areas of responsibility, in addition to the one-week loan transactions already offered. In addition, the prices of the existing dollar exchange agreements are to be reduced by 25 basis points.
“The new pricing conditions and term offers will remain in force as long as necessary to support the smooth functioning of the US dollar financing markets,” said the ECB. The changes should come into effect with the next scheduled stores in the week starting March 16. With the move, the six central banks want to achieve that banks and companies can get dollars on favorable terms. Banks use dollars for many important financial transactions, not least with corporations.
The US currency rate had risen sharply in recent weeks in the wake of the virus crisis. According to the ECB, the agreement is intended to help ease tensions on the global finance markets. Negative consequences for the supply of credit to households and companies at home and abroad are to be mitigated.
Bundesbank President Jens Weidmann sees the coordinated approach of major central banks to provide financial institutions with cheap dollars as positive. “Reliable access to liquidity in US dollars is now particularly important for many banks and companies, including in the euro area,” Weidmann explained late on Sunday evening. The measure makes an important contribution to this. “The world’s major central banks take their responsibility seriously and act in close coordination.”
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