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General TradingC
Currency Swap Line
A currency swap line is an agreement between two central banks to exchange their respective currencies, providing liquidity in foreign currencies during times of financial stress. These arrangements help stabilize markets by ensuring banks in one country can access funding in another country's currency. The US Federal Reserve maintains standing swap lines with several major central banks, which can be activated quickly during global financial crises.
Example
“During the 2008 financial crisis, the US Federal Reserve established emergency dollar swap lines with the European Central Bank and other major central banks, providing dollar liquidity to foreign banks that were struggling to secure dollar funding.”