The Federal Reserve has extended currency swap lines with foreign central banks as the continued concern over the sovereign debt crisis in the eurozone has limited dollar liquidity, according to Financial Times. The Fed will offer swap lines with the Bank of Canada, Bank of England, European Central Bank, Bank of Japan, and Swiss National Bank until the end of August 2011. The Federal Open Market Committee approved the move on Dec. 14, extending measures that were set to expire at the end of January.
The swap lines were established in December 2007 and originally expired in early 2010, until the sovereign debt crisis was ignited in Greece during May, forcing the lines to be reopened. The swap lines are not being used heavily at the moment with only $60 million tapped, which pales in comparison to the $9.2 billion drawn down in May at the height of the European crisis, but the move still underscores the growing political concern over the stability of the eurozone.
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