Central Bank Liquidity Swaps: Access, Pricing, and FIMA Repo

Federal Reserve central bank liquidity swaps are standing and temporary agreements that let the Fed lend U.S. dollars to select foreign central banks in exchange for their local currencies, with both sides committed to reversing the trade at the original exchange rate on a set future date. They exist because a dollar shortage in London, Tokyo, or Frankfurt can quickly become a credit problem in the United States, and the swap lines give the Fed a way to keep dollars circulating overseas without touching foreign private banks directly.

How a Dollar Swap Works

Each swap has two steps. In the first, the foreign central bank sells a set amount of its own currency to the Fed at the current market exchange rate, and the Fed credits an equivalent amount of dollars to an account the foreign central bank holds at the Federal Reserve Bank of New York. The foreign currency the Fed receives stays in an account at the foreign central bank, not in U.S. vaults.¹

Once the dollars land, the foreign central bank lends them to commercial banks in its own jurisdiction, usually against collateral. The Fed has no relationship with those commercial banks. Its only counterparty is the foreign central bank.

The second step reverses the first. On a predetermined date, anywhere from overnight to three months later, the foreign central bank returns the exact dollar amount and the Fed returns the exact amount of foreign currency, using the original exchange rate regardless of how currencies have moved since.¹ Neither side is betting on currency movements. The fixed-rate structure removes foreign exchange risk from the transaction.

Even when markets are calm, the New York Fed periodically runs small test transactions to confirm the operational plumbing works before it is actually needed.²

Which Central Banks Have Access

Five central banks have held permanent swap lines with the Fed since October 31, 2013:³

Bank of Canada
Bank of England
Bank of Japan
European Central Bank
Swiss National Bank

These five sit at the center of the largest financial systems outside the United States. Standing arrangements let the lines be activated immediately when markets seize, without renegotiating. The same arrangements existed as temporary facilities before 2013 and required periodic renewal until the conversion to permanent status removed that friction.¹

During severe global stress, the Fed has extended temporary lines to additional central banks. In March 2020, nine more institutions gained access, including the Reserve Bank of Australia, Banco Central do Brasil, Bank of Korea, Banco de México, Monetary Authority of Singapore, Sveriges Riksbank, Danmarks Nationalbank, Norges Bank, and the Reserve Bank of New Zealand. Those lines were extended several times and ultimately expired at the end of December 2021.⁴ No temporary swap lines are active as of 2026.¹

Eligibility rests with the Federal Open Market Committee, which weighs whether a dollar shortage in a given jurisdiction could threaten U.S. financial stability.¹ The volume of dollar-denominated debt in a region and the interconnectedness of its banks with U.S. institutions weigh heavily in the assessment.

What the Foreign Central Bank Pays

The interest rate on dollar swaps is the overnight index swap (OIS) rate for the relevant maturity plus a fixed spread. That spread has changed over time. It started at 100 basis points when the lines were reactivated during the financial crisis, dropped to 50 basis points in late 2011,⁵ and as of late 2025 stands at 25 basis points above OIS.⁶ The logic behind penalty pricing is straightforward: the rate has to be low enough to calm a real crisis but high enough that no central bank uses the facility when private funding is available.

The foreign central bank pays this interest in dollars when the swap matures. The income the Fed earns is treated like any other Fed earnings. After operating expenses and required dividends to member banks, surplus funds go to the Treasury’s general fund.⁷ During calm periods this income is negligible. During crises when hundreds of billions are drawn, it becomes meaningful.

The Fed does not control what the foreign central bank charges its own borrowers. In practice, foreign central banks set their lending rate above the swap cost, giving commercial banks another reason to seek private funding first.

Who Bears the Credit Risk

Credit risk sits entirely with the foreign central bank. If the Bank of Japan lends swap-line dollars to a Japanese commercial bank and that bank defaults, the Bank of Japan still owes the full amount back to the Fed. The Fed never absorbs losses from a foreign private bank’s failure. The counterparty is always a sovereign central bank, and the foreign currency held at that central bank provides additional security.

When and Why the Fed Activates the Lines

Swap lines get used when offshore dollar shortages become severe enough to threaten U.S. financial conditions. Many foreign banks and corporations hold dollar-denominated debt and assets, and they need a steady flow of dollars to meet obligations. When private lenders pull back, as they reliably do in a global crisis, those foreign institutions face a funding crunch.

The reason this matters domestically: a foreign bank starved of dollars might dump U.S. Treasury bonds to raise cash. If enough do it at once, American interest rates spike. Or the bank might cut lending to U.S. companies, tightening credit at home even when U.S. banks are in fine shape. The swap lines are designed to stop foreign stress from becoming a domestic problem.

This has played out on a large scale several times. During the 2008 financial crisis, global dollar demand overwhelmed private markets and the Fed ultimately extended temporary lines to 14 central banks. During the COVID-19 pandemic in March 2020, the standing-line central banks moved 7-day dollar operations from weekly to daily to keep dollars flowing.⁸ The same shift to daily operations happened again on March 20, 2023, after the collapse of Silicon Valley Bank stirred brief global banking anxiety, and continued through at least the end of April.⁹

The New York Fed’s open market desk monitors dollar funding conditions daily. When the cost of borrowing dollars in private markets climbs well above the swap penalty rate, that gap signals the lines are needed. Sharp exchange rate volatility also factors in, since it can disrupt import and export pricing and feed into U.S. inflation and employment. The Fed does not target specific exchange rates but will act to prevent disorderly conditions from spiraling.

Central Banks Without a Swap Line: The FIMA Repo Facility

The five standing arrangements leave out large parts of the world. To fill that gap, the Fed established the Foreign and International Monetary Authorities (FIMA) Repo Facility, first as a temporary measure in March 2020 and then as a permanent standing facility in July 2021.¹⁰

FIMA works differently from a swap. Instead of exchanging currencies, a foreign central bank temporarily sells U.S. Treasury securities it already holds to the Fed for dollars, then buys them back later. The practical benefit is that a central bank needing dollars can get them without dumping Treasuries into the open market, which would push U.S. interest rates up at the worst possible moment.¹⁰

Eligibility is much broader than for swap lines. Most central banks and international monetary authorities holding accounts at the New York Fed can apply, though the Fed retains the right to approve or deny each request.¹¹ Together the two programs form a two-tier system: swap lines for the five most systemically important foreign central banks, FIMA for the rest.

What the Public Sees

The Fed publishes aggregate swap line data every Thursday in its H.4.1 statistical release, titled “Factors Affecting Reserve Balances.”¹² The release shows the total dollar amount outstanding across all swap lines combined but does not break the figure down by individual foreign central bank.¹³ In calm markets the figure is small, reflecting little more than test operations. During a crisis it can climb into the hundreds of billions, which makes the weekly release a closely watched indicator of global dollar stress.

The New York Fed separately publishes the results of individual swap operations, including amounts, maturities, and interest rates applied to specific transactions.²

Transaction-level detail identifying each borrower and exact terms is subject to a disclosure delay under the Dodd-Frank Act. Swap line transactions fall under open market operations governed by Section 14 of the Federal Reserve Act, so those details are released on the last day of the eighth calendar quarter after the quarter in which the transaction occurred, roughly a two-year lag.¹⁴ Congress built the delay in deliberately. Real-time disclosure of which central banks are drawing on swap lines could stigmatize the borrower, signaling to markets that a particular country’s banking system is in trouble, which would discourage use of the facility at the exact moment it is most needed.

Legal Authority

The authority for all swap operations comes from Section 14 of the Federal Reserve Act, which authorizes Federal Reserve banks to buy and sell cable transfers, bankers’ acceptances, and bills of exchange in the open market.¹⁵ Every swap arrangement, whether standing or temporary, requires authorization from the Federal Open Market Committee.¹

1
Federal Reserve Board. Central Bank Liquidity Swaps
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Federal Reserve Bank of New York. Central Bank Liquidity Swap Operations
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Federal Reserve Bank of New York. Central Bank Swap Arrangements
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Federal Reserve Bank of New York. The Fed’s Central Bank Swap Lines and FIMA Repo Facility
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Federal Reserve. Addressing Global Dollar Liquidity Strains: The Role of the Federal Reserve’s Swap Arrangements
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Federal Reserve Bank of Boston. Swap Line Dollar Supply
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Office of the Law Revision Counsel. 12 U.S. Code 289 – Dividends and Surplus Funds of Reserve Banks
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Federal Reserve. Coordinated Central Bank Action to Further Enhance the Provision of U.S. Dollar Liquidity
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Federal Reserve. Coordinated Central Bank Action to Enhance the Provision of U.S. Dollar Liquidity
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Federal Reserve. Foreign and International Monetary Authorities (FIMA) Repo Facility
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Federal Reserve. FIMA Repo Facility FAQs
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Federal Reserve. Federal Reserve Balance Sheet: Factors Affecting Reserve Balances – H.4.1
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Federal Reserve. Factors Affecting Reserve Balances – H.4.1
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U.S. Congress. Dodd-Frank Wall Street Reform and Consumer Protection Act
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Federal Reserve. Section 14 – Open-Market Operations