Late on Sunday, the 15th of March 2020, Central Banks of a gauge of global economic majors such as the European Central Bank (ECB), the Central Bank of the United States, Bank of Canada (BoC), BoE (Bank of England), BoJ (Bank of Japan) alongside the Central Bank of Switzerland had agreed to proffer a three-month credit in American dollars at a cheaper rate than usual in a bid to make the American Dollar affordable to many lenders across the globe.
Besides, the latest move of global economic majors came forth shortly after the US Fed had slashed interest rate to near-zero in a coronavirus-led emergency move. Apart from that, as beforementioned, the Central Banks’ move coupled with a near-zero interest rate of the US Fed, had been engineered to make US Dollar more affordable to lenders and companies, valuation of which had been surging intransigently in recent past in context of an overwhelmed global equity market atmosphere amid rising frets of coronavirus’ financial fallouts.
Besides, under the joined program unveiled late on Sunday (March 15th), the six Central Banks would start off offering the American dollar at a weekly basis with an 84-day maturity and a 25bps overnight lending rate alongside their weekly operations, as the European Central Bank (ECB) said in a press release late on Sunday (March 15th), “The new pricing and maturity offerings will remain in place as long as appropriate to support the smooth functioning of US dollar funding markets.
The swap lines are available standing facilities and serve as an important liquidity backstop to ease strains in global funding markets, thereby helping to mitigate the effects of such strains on the supply of credit to households and businesses, both domestically and abroad. ”