Swiss National Bank makes another big draw on Fed swap line

THE Swiss National Bank this week drew more than US$11 billion from the US Federal Reserve’s currency swap line facility, another sharp rise from the week-earlier amount, New York Fed data released on Thursday (Oct 20) showed.

The SNB had drawn nearly US$6.3 billion the week before and US$3.1 billion the week before that.

The three transactions were larger than any of the draws the SNB made during the spring of 2020 when it and other central banks tapped the Fed for billions of dollars during the global market panic that erupted in the early days of the coronavirus pandemic.

The latest swap covered seven-day liquidity at an annualised rate of 3.33%, the same as for the previous two tranches.

The SNB referred to its auction results showing 17 parties had participated in its dollar auction this week and declined further comment.

The SNB is one of five foreign central banks with whom the Fed has established standing currency swap lines. They are available also to the European Central Bank, Bank of Japan, Bank of England and Bank of Canada and allow those banks to deliver dollar-funding to financial institutions in their own jurisdictions.

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The European Central Bank drew US$210.5 million and Bank of Japan US$1 million via swap lines this week. REUTERS