US Fed Opens Liquidity Facility For Several Central Banks Amid Global Cash Crunch

International Business

The US Federal Reserve announced the establishment of dollar liquidity facilities to provide funds to more central banks, including Brazil and Mexico.

Written By Kunal Gaurav | Mumbai | Updated On:
US Fed

The US Federal Reserve announced the establishment of temporary US dollar liquidity arrangements to provide funds to more central banks, including Brazil and Mexico. It said that the facilities are designed to help lessen strains in global US dollar funding markets. It will further mitigate the effects of these strains on the supply of credit to households and businesses, both domestically and abroad.

“The Federal Reserve also has standing US dollar liquidity swap lines with the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, and the Swiss National Bank,” the central bank said in a statement.

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The Fed will provide up to $60 billion each to Reserve Bank of Australia, the Banco Central do Brasil, the Bank of Korea, the Banco de Mexico, the Monetary Authority of Singapore, and the Sveriges Riksbank. It will also provide $30 billion each to central banks of Denmark, Norway and New Zealand.

Nations across the world have started taking drastic measures after the World Health Organisation (WHO) called the novel coronavirus i.e. COVID-19 a pandemic and said that the epicentre of the outbreak has shifted from China to Europe. WHO Director-General Tedros Adhanom Ghebreyesus has advised governments to test as many people as possible to mitigate the risk.

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'Test, treat and trace'

During a press briefing on Wednesday, March 18, the WHO chief Tedros Adhanom Ghebreyesus emphasised the need for physical distancing measures like cancelling sporting events, concerts and other large gatherings and said that it can help to slow transmission of the virus. Such measures can reduce the burden on the health system and they can help to make epidemics manageable, allowing targeted and focused measures, he added.

“But to suppress and control epidemics, countries must isolate, test, treat and trace. If they don’t, transmission chains can continue at a low level, then resurge once physical distancing measures are lifted,” said Ghebreyesus.

The WHO chief recommended to isolate, test and treat every suspected case, and trace every contact, making it the backbone of the response in every country. He said that many countries are listening to our call and finding solutions to increase their ability to implement the full package of measures that have turned the tide in several countries.

“But we know that some countries are experiencing intense epidemics with extensive community transmission. We understand the effort required to suppress transmission in these situations. But it can be done,” he added.

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