Hot Development: Important Moves From FED, European Central Bank and 4 Other Central Banks! What is the Effect on Bitcoin?

The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss Federal Reserve today announced coordinated action to improve liquidity provision through US dollar liquidity swap line arrangements.

To increase the effectiveness of swap lines in providing US dollar funding, central banks that currently offer US dollar operations have agreed to change the frequency of 7-day operations from weekly to daily. These daily operations will begin on Monday, March 20, 2023 and will continue until at least the end of April.

What Does the Last Move of the FED and Other Central Banks Mean?

Swap lines will allow these central banks to borrow US dollars from each other in exchange for their own currencies, giving financial institutions access to the US dollar funding they need to meet their obligations in times of market stress.

In simple terms, the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the US Federal Reserve, and the Swiss Federal Reserve decided to work together to facilitate access to the US dollar. They will do this by increasing the frequency of a process called “liquidity swap lines” from once a week to every day.

The goal is to ensure that enough money is available to support lending to households and businesses even in times of shortage of funds.

In its latest statement, the US Federal Reserve said that swap lines help reduce pressures on credit supply to households and businesses.

Press release: Coordinated central bank action to enhance the provision of US dollar liquidity https://t.co/eOjI4tBRPz pic.twitter.com/Zvz0yJg1Mr

— European Central Bank (@ecb) March 19, 2023

The head of the European Central Bank, Christine Lagarde, issued the following statement on the subject:

“I welcome the quick steps and decisions taken by the Swiss authorities. These decisions are of great importance in terms of restoring orderly market conditions and ensuring financial stability.

The euro area banking sector is resilient with strong capital and liquidity positions. In any case, our policy toolkit is fully equipped to provide liquidity support to the euro area financial system if needed and to maintain the smooth transmission of monetary policy.”

Experts say that this will have a positive effect on Bitcoin. Because the FED had reduced the frequency of US dollar operations, that is, from weekly to daily, at the time of the last pandemic.

This monetary abundance is expected to have a positive impact on the market, especially for risky assets such as Bitcoin.

*Not investment advice.