U.S. Banks and Global Liquidity

Serie

• International Finance Discussion Papers

Resumen

• We characterize how U.S. global systemically important banks (GSIBs) supply short-term dollar liquidity in repo and foreign exchange swap markets in the post-Global Financial Crisis regulatory environment and serve as the "lenders-of-second-to-last-resort". Using daily supervisory bank balance sheet information, we find that U.S. GSIBs modestly increase their dollar liquidity provision in response to dollar funding shortages, particularly at period-ends, when the U.S. Treasury General Account balance increases, and during the balance sheet taper of the Federal Reserve. The increase in the dollar liquidity provision is mainly financed by reducing excess reserve balances at the Federal Reserve. Intra-firm transfers between depository institutions and broker-dealer subsidiaries within the same bank holding company are crucial to this type of "reserve-draining" intermediation. Finally, we discuss factors that contributed to the repo spike in September 2019 and the subseque nt response of U.S. GSIBs to recent policy interventions by the Federal Reserve.

autores

• Correa, Ricardo
• Du, Wenxin
• Liao, Gordon Y.

fecha de publicación

• 2020

Área temática

• E40 - Dinero y tipos de interés: Generalidades
• F30 - Finanzas internacionales: Generalidades
• G20 - Instituciones y servicios financieros: Generalidades

Enfoque geográfico

• North America  Continent
• United States of America  Country

Líneas de investigación

• Covered interest rate parity
• Global banks
• Liquidity
• Repos
• Reserves

Issue

• 1289