Swap arrangements

Definition: [crh] Short-term reciprocal lines of credit between the Federal Reserve and 14 foreign centeral banks as well as the Bank for International Settlements. Through a swap transactions, the Federal Reserve can, in effect, borrow<Definition: /A> foreign currency in order to purchase dollars in the foreign exchange market. In doing so, the demand for dollars and the dollar's Definition: foreign exchange value are increased. Similarly, the Federal Reserve can temporarily provide dollars to foreign central banks through swap arrangments.

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