Swap lines better than foreign reserves during crises, research finds

Temporary reciprocal currency arrangements between central banks, called swap lines, may be better than stockpiled foreign reserves when it comes to providing dollars to domestic banks during times of market stress, according to new research published in the latest Quarterly Review by the Bank for International Settlements.

Researchers found the Bank of Korea's (BoK) use of part of a $30-billion swap line facility with the US Federal Reserve during the global financial crisis from 2007 to 2008 w