# Swiss National Bank makes another large draw on Fed swap line
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-10-14
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Swiss National Bank doubled currency draw from Federal
Meta Description: The SNB draws $6.3 billion from the Fed's swap line facility, showing increased demand amid market instability and global economic challenges.
URL: https://financedigest.com/swiss-national-bank-makes-another-large-draw-on-fed-swap-linehtml

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(Reuters) – The Swiss National Bank this week drew nearly $6.3 billion from the U.S. Federal Reserve’s currency swap line facility, roughly double the amount drawn a week earlier, New York Fed data released on Thursday showed.

The SNB on Wednesday drew $6.27 billion in U.S. [currency for a seven-day term at an annualized rate](https://www.financedigest.com/currency-exchange-how-to-find-the-best-rates.html "Currency Exchange: How to Find the Best Rates") of 3.33%. A [week earlier it drew $3.1 billion at the same term and rate](https://www.financedigest.com/rate-rise-fears-prompt-third-week-of-global-equity-funds-outflows.html "Rate rise fears prompt third week of global equity funds outflows").

The two transactions were larger than any of the draws the SNB [made during the spring of 2020 when it and other central banks](https://www.financedigest.com/fintech-v-the-banks-uneasy-bedfellows-or-a-match-made-in-heaven.html "FinTech v the Banks: Uneasy Bedfellows or a Match Made in Heaven?") tapped the Fed for billions of dollars during the global market panic that erupted in the early days of the coronavirus pandemic.

The SNB is one of five foreign central [banks with whom the Fed has established standing currency swap](https://www.financedigest.com/explainer-what-are-credit-default-swaps-and-why-are-they-causing-trouble-for-europes-banks.html "Explainer-What are credit default swaps and why are they causing trouble for Europe’s banks?") lines. They are available also to the European Central Bank, Bank of Japan, Bank of [England and Bank](https://www.financedigest.com/bank-of-england-fines-former-tsb-executive-over-2018-it-failure.html "Bank of England fines former TSB executive over 2018 IT failure") of Canada and allow those banks to deliver dollar-funding to financial institutions in their own jurisdictions.

The [ECB was the only other central bank](https://www.financedigest.com/big-ecb-hike-adds-fuel-to-the-banking-sector-fire.html "Big ECB hike adds fuel to the banking sector fire") making a swap trade with the Fed this week. It drew $211.5 million, up from $206.5 million a [week earlier but in the range of the ECB’s typical weekly](https://www.financedigest.com/global-equity-funds-see-biggest-weekly-outflow-in-five-weeks.html "Global equity funds see biggest weekly outflow in five weeks") draw over the last year.

The swap [lines tend to see little](https://www.financedigest.com/birmingham-lines-up-post-brexit-housing-plan-with-a-little-help-from-its-friends-in-china.html "Birmingham lines up post-Brexit housing plan, with a little help from its friends in China") use during periods of market calm. Their relatively limited use in recent weeks as [markets have been battered by the Fed’s](https://www.financedigest.com/markets-start-signalling-fed-may-be-going-too-far-amundi.html "Markets start signalling Fed may be going too far – Amundi") hawkish policy stance in its battle with inflation and as the BoE has had to intervene in a U.K. bond market roiled by the new Conservative government’s fiscal plans has been noted by analysts as an [indication](https://www.financedigest.com/market-stress-indicators-react-sharply-after-u-s-bank-failures.html "Market stress indicators react sharply after U.S. bank failures") that markets, while choppy and at times thin, are not dysfunctional.

The increase this week “is substantial, but nowhere near the type of thing seen in an acute crisis,” Jefferies money market economist Thomas Simons wrote in a note to clients recapping the [Fed’s weekly balance sheet data](https://www.financedigest.com/wage-data-dents-dollar-recovery-before-fed-rate-decision.html "Wage data dents dollar recovery before Fed rate decision").

(Reporting by Dan Burns; Editing by Chris Reese)


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