PHILADELPHIA Jan 4 Policymakers around the
world should consider setting up more currency swap arrangements
to make the global financial system more resilient to future
crises, a top Bank of England policymaker said on Saturday.
Andrew Haldane, BoE director of financial stability, said
the rise in financial interdependence around the world requires
bigger backstops to prevent crises from spreading across
Some of the biggest backstops developed since the 2007-09
financial crisis, he said, have been the bilateral deals between
six of the world's biggest central banks to supply one another
with short-term funding during periods of market stress. The aim
of this central bank web is to keep liquidity in foreign
currencies from drying up during a crisis.
"Within that there may be the seed of something important if
that web could be extended beyond the six to embrace a fuller
and broader range of countries," Haldane told an economics
Last October, the Bank of Japan, the U.S. Federal Reserve,
the European Central Bank, the Bank of England and the central
banks of Canada and Switzerland made the currency swap
agreements permanent. At the time, BOJ Governor Haruhiko Kuroda
said there were no plans "to extend the swap arrangements beyond
the six central banks."
The deals evolved from arrangements created during the
financial crisis in which the Fed made short-term loans to other
big central banks whose markets had grown short of U.S. dollar
Haldane said international policymakers should also improve
the ways in which they monitor global financial markets for
stress and develop clear rules for when countries should put
"grit in the wheels" of financial flows to maintain stability.