From Bazooka to Backstop: The Political Economy of Standing Swap Facilities
Lea Steininger and
Mathis L. Richtmann ()
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Mathis L. Richtmann: Reuters & LSE
Department of Economics Working Papers from Vienna University of Economics and Business, Department of Economics
Abstract:
The permanent international lender of last resort consists of a swap line network between six major central banks, centering around the US Federal Reserve. Arguably, this network is a solution to a long debated problem as it provides public emergency liquidity provision to the world's largest financial market, the Eurodollar market. Drawing on exclusive interviews with monetary technocrats as well as a textual analysis of Federal Open Market Committee meeting transcripts over the course of 14 years, we reconstruct how this facility came into being. Building on Kalyanpur (2017) and Braun (2015), we develop an interpretative framework of bricolage to set the formation into context: In times of crises, central bankers rely on retrospection, experimentation, and creative re-deployment to develop their tools. However, in non-crises times, those tools prevail which offer what we coin 'bureaucratic familiarity'.
Keywords: Standing Swap Facilities; lender of last resort; International Monetary Policy; Central Bank Cooperation; Monetary Technocrats (search for similar items in EconPapers)
JEL-codes: E52 E58 F5 (search for similar items in EconPapers)
Date: 2023-02
New Economics Papers: this item is included in nep-ban, nep-his and nep-mon
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Journal Article: From bazooka to backstop: the political economy of standing swap facilities (2023)
Working Paper: From Bazooka to Backstop: The Political Economy of Standing Swap Facilities (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:wiw:wiwwuw:wuwp334
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