CENTRAL BANKS BOOST MONEY FLOW.

The Federal Reserve and five counterparts united to ensure dollars keep flowing around the world after the coronavirus emergency sparked a rush for greenbacks.

In co-ordinated statements on Sunday, the Fed, Bank of Japan, European Central Bank, Swiss National Bank, Bank of Canada and Bank of England said they would use swap lines to support international supply of the world’s reserve currency.

The aim will be to meet the needs of companies around the world who find themselves strapped for cash and drawing down dollar credit lines as the spreading virus threatens a global recession.

The Fed also released a string of stimulus measures on Sunday, including cutting its benchmark interest rate by a full percentage point to near zero and promising to boost its bond holdings by at least US$700 billion.

U.S. President Donald Trump, who has repeatedly attacked the Fed for more than a year for not lowering rates faster and further, quickly expressed support for the move.

“It makes me very happy and I want to congratulate the Federal Reserve,” he said. “That’s a big step and I’m very happy they did it.”

Fed Chairman Jerome Powell Powell told reporters on a late-sunday conference call that the rate decision is in lieu of the Fed’s regularly scheduled meeting this week, planned for Tuesday and Wednesday.

The Fed said the six central banks had agreed to lower the pricing on the arrangements by 25 basis points. To increase their effectiveness, the foreign central banks will auction the dollars in each jurisdiction for 84 days in addition to the current one-week periods.

The next scheduled operations are this week and the new pricing and maturities will “remain in place as long as appropriate to support the smooth functioning of U.S. dollar funding markets,” the Fed said in its statement.

The swap lines were set up in 2007, terminated in 2010 and then revived as the euro crisis emerged later that same year. In 2013, the Fed made the arrangements with five developed-nation counterparts a standing facility, in effect making dollars widely available to banks and borrowers.

Given that they involve the provision of currency to foreign agents, the lines have faced political opposition. Some in the U.S. Congress criticized the Fed for extending dollars to foreign entities in the past.

During the global crisis the U.S. expanded the access to a number of others, including the central banks of Brazil and South Korea, though no emerging market currently has it.