The world’s major central banks are trying to get financial markets back to the ‘old normal’. The Federal Reserve (Fed), the European Central Bank (ECB), the Bank of England (BoE), the Bank of Japan (BoJ) and the Swiss National Bank (BSN) have agreed to cancel the daily liquidity auctions in in view of the improvement experienced by financing conditions in dollars and the “low” demand for the latest operations.
In consultation with the central bank led by Jerome Powell, this decision will take effect on May 1, just before the Fed and ECB meetings, restoring the previously stipulated weekly frequency. In a joint statement, the aforementioned organizations ensure that they are ready to readjust the provision of liquidity in dollars according to the needs of the market.
The daily injection was stipulated on March 19 on the occasion of the rescue of Credit Suisse, for which UBS managed to buy it, through an exchange of shares that valued the titles of the problematic bank at 0.76 francs, 59% per below the price at which their shares closed on the Friday before the operation and a dowry of 25,000 Swiss francs from which the rescuer will benefit.
The swap lines between these central banks are permanent facilities available and are used as liquidity support with the aim of alleviating tensions in world financing markets, which contributes to reducing the effects of said tensions on the supply of credit to homes and businesses, nationally and internationally.
