Fed will fund weekly dollars instead of daily
The Fed and five other major central banks said they would only return to their weekly auctions for US dollar funding, given the more relaxed market conditions.
The US Federal Reserve, the Euro Zone, its counterparts in Canada, Japan, England and Switzerland introduced daily dollar provisioning to provide liquidity to the global financial system in March.
In the statement made on the subject, “Given the improvement in dollar funding conditions and low demand for the last dollar liquidity operations, institutions have jointly decided to change the frequency of 7-day operations from daily to weekly.” expressions were used.
The new regulation comes into effect on May 1.
“These central banks are ready to re-adjust the supply of US dollar liquidity as market conditions require. The clearing lines between these central banks are existing fixed facilities and act as an important liquidity support mechanism to ease pressures in global funding markets so that such pressures can be both domestically and internationally. It helps mitigate the effects of households and businesses on the supply of credit, both at home and abroad.