.federalreserve's decision to increase the frequency of the dollar swap lines from weekly to daily is aimed at avoiding a March 2020-like global dash for cash where investors sell everything, including BTC, for cash. reports godbole17.
it had joined hands with other major central banks to ensure a steady flow of the U.S. dollar, a dominant reserve currency, in the global financial system.
The move is aimed at calming exchange rate volatility and avoiding strains in the supply of credit to households and businesses worldwide. It comes on the heels of blowups of three banks in the U.S. and the takeover of troubled Swiss-lender credit Suisse by UBS and Swiss National Bank. More importantly, the Fed's backstopping of the global dollar liquidity reduces the risk of a worldwide dash-for-cash – investors selling everything, including bitcoin and other cryptocurrencies, and moving to cash, predominantly the U.S. dollar. During turmoil, investors typically sell risk assets and park money in cash, preferably the dollar. That drives up the cost of acquiring U.S. dollars, leading to stress in the financial system.
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