swap arrangements

swap arrangements
short-term reciprocal lines of credit ( line of credit) between the Federal Reserve and 14 foreign central banks as well as the bank for International Settlements . Through a swap transactions, the Federal Reserve can, in effect, borrow foreign currency in order to purchase dollars in the foreign exchange market. In doing so, the demand for dollars and the dollar's foreign exchange value are increased. Similarly, the Federal Reserve can temporarily provide dollars to foreign central banks through swap arrangements. Bloomberg Financial Dictionary

Financial and business terms. 2012.

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