liquidity swaps

Federal Reserve Announces the Extension of its Temporary U.S. Dollar Liquidity Swap Lines and the Temporary Repurchase Agreement Facility

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On December 16, the Federal Reserve announced an extension through September 30, 2021, of its temporary U.S. dollar liquidity swap lines and the temporary repurchase agreement facility for foreign and international monetary authorities (FIMA repo facility). In March 2020, these facilities were temporarily established with the goal to ease strains in global dollar funding markets created by the COVID-19 pandemic and to support the supply of credit to households and businesses. These facilities were previously extended as of July 29, 2020. Release.

FSA Proposed Guidance on Liquidity Swaps

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On July 21, the FSA issued proposed guidance on liquidity swaps, requiring firms participating in such transactions to inform the FSA before execution under PRIN 11. The proposed guidance also provides the basis of the FSA’s Pillar 2 assessment of liquidity swap transactions, including: (i) assessing the risk management systems of the firms engaging in the transaction; (ii) the exit strategy of a firm in the event of a counterparty default; and (iii) the level of asset encumbrance resulting from the liquidity swap. Comments must be submitted by September 21. FSA Release. FSA Proposed Guidance.