The US Federal Reserve's efforts to alleviate a shortage of dollar funding in the financial system by swapping some $280bn (â¬190bn) in dollars with central banks around the world, is failing to push down the cost of borrowing over one and three months as banks remain reluctant to lend to each other.
Concerned about liquidity pressures in the short-term dollar funding markets, the Fed this morning said it had engaged in reciprocal swap agreements worth $30bn with the Australian, Danish, Norwegian and Swedish central banks, taking its total commitments in dollar swaps to central banks around the world to $277bn.
