{"id":20228,"date":"2023-04-25T20:17:43","date_gmt":"2023-04-25T20:17:43","guid":{"rendered":"https:\/\/crowdfundjunction.com\/blog\/central-banks-reduce-us-dollar-swap-lines-to-weekly-auctions-amid-moodys-us-banking-sector-downgrade-economics-bitcoin-news\/"},"modified":"2023-04-25T20:17:43","modified_gmt":"2023-04-25T20:17:43","slug":"central-banks-reduce-us-dollar-swap-lines-to-weekly-auctions-amid-moodys-us-banking-sector-downgrade-economics-bitcoin-news","status":"publish","type":"post","link":"https:\/\/crowdfundjunction.com\/blog\/central-banks-reduce-us-dollar-swap-lines-to-weekly-auctions-amid-moodys-us-banking-sector-downgrade-economics-bitcoin-news\/","title":{"rendered":"Central Banks Reduce US Dollar Swap Lines to Weekly Auctions Amid Moody’s US Banking Sector Downgrade \u2013 Economics Bitcoin News"},"content":{"rendered":"

(Originally posted on : Bitcoin News )<\/b>
\n<\/p>\n

\n
\n<\/header>\n
\n\n<\/div>\n

After the tumultuous downfall of three major banks, namely Silvergate Bank, Silicon Valley Bank, and Signature Bank, several central banks made a collaborative announcement of a swift, coordinated emergency response. The intervention aimed to furnish U.S. dollar liquidity, with the intention of alleviating the impact of such severe shocks on the flow of credit to households and businesses. As per the joint statement published on Tuesday, the central banks have decided to curtail these newly introduced swap line arrangements, switching them from daily auctions to weekly operations.<\/strong><\/p>\n

Central Banks Cut Back USD Liquidity Backstop; Moody\u2019s Downgrades U.S. Banking Sector and 11 Regional Banks<\/h2>\n

According to a joint statement<\/a> from several central banks, including the Bank of England, the Bank of Japan, the European Central Bank (ECB), the Swiss National Bank, and the U.S. Federal Reserve, the recently created U.S. dollar swap line arrangements will be reduced from daily to weekly.<\/p>\n

The announcement cites \u201cimprovements in U.S. dollar funding conditions and low demand at recent 7-day maturity\u201d as the reason for the auction cuts. However, the central banks say that the \u201cliquidity backstop to ease strains in global funding markets\u201d could adjust the operations rate provision depending on \u201cmarket conditions.\u201d<\/p>\n

The original coordinated emergency response announcement<\/a> was made 37 days ago on March 19, 2023. The decision was made after the fall of Silvergate Bank, Silicon Valley Bank (SVB), and Signature Bank. The demise of SVB\u2019s UK branch and the fall of Credit Suisse followed with the Swiss National Bank urging UBS to acquire Credit Suisse. While the central banks cite U.S. dollar funding conditions improving, the world\u2019s leading credit rating agency, Moody\u2019s Investor Service, downgraded the U.S. banking sector five days ago.<\/p>\n

\u201cThere are negative credit implications for the U.S. banking sector that extend beyond immediate funding challenges to downward pressure on banks\u2019 earnings, combined in some cases with weaker capitalization and risks related to commercial real estate (CRE),\u201d Moody\u2019s disclosed<\/a> on Friday.<\/p>\n

Western Alliance CEO: The Waters Are Now Calmer<\/h2>\n

Amid the U.S. banking sector downgrade, the credit rating agency that evaluates and assigns a credit rating to each bank also downgraded 11 U.S. banks, including First Republic Bank, U.S. Bancorp, Comerica Inc., Zions Bancorporation, and Western Alliance Bancorp.<\/p>\n

\n

*FIRST REPUBLIC BANK PLUNGES 29% TO TRADE AT RECORD LOW<\/p>\n

\u2014 zerohedge (@zerohedge) April 25, 2023<\/a><\/p>\n<\/blockquote>\n

In a statement issued on behalf of Zions Bancorporation to the Wall Street Journal, the recent assessment provided by Moody\u2019s was contested<\/a>. Disagreeing with the agency\u2019s conclusions, James Abbott, the bank\u2019s director of investor relations, expressed disappointment that Moody\u2019s had overlooked the \u201ctremendous value\u201d inherent in Zions\u2019 inexpensive deposit foundation.<\/p>\n

Several market observers believe that the banking crisis is ongoing, with JPMorgan Chase CEO Jamie Dimon stating<\/a> in early April that it is not over. Economist and gold investor Peter Schiff has also warned<\/a> of a significant recession this month, indicating that the banking issues are far from resolved.<\/p>\n

Furthermore, Lynette Zang, the chief market analyst at ITM Trading, recently told<\/a> Kitco News in an interview that a banking fallout could trigger the onset of central bank digital currencies (CBDCs), suggesting that there may be more to come. However, Huw Roberts, head of analytics at Quant Insight, believes<\/a> that the banking crisis is \u201clargely contained,\u201d while Western Alliance CEO Ken Vecchione noted that \u201cthe waters are now calmer.\u201d On Tuesday afternoon at 3:00 p.m. Eastern Time, First Republic Bank\u2019s (NYSE: FRC<\/a>) shares slid more than 40%.<\/p>\n

\n
\nTags in this story
\n<\/h6>\n
Banking Crisis<\/a>, CBDCs<\/a>, central bank digital currencies<\/a>, Central Banks<\/a>, credit rating<\/a>, Downgrade<\/a>, emergency response<\/a>, Liquidity<\/a>, market observers<\/a>, Moody’s<\/a>, Recession<\/a>, swap lines<\/a>, US Dollar<\/a><\/div>\n<\/div>\n

What are your thoughts on the joint decision by several central banks to reduce U.S. dollar swap line arrangements from daily to weekly auctions, and Moody\u2019s recent downgrade of the U.S. banking sector and 11 regional banks? Do you believe the banking crisis is far from over, or do you think the waters are now calmer, as some experts suggest? Share your views in the comments section below.<\/strong><\/em><\/p>\n

\n
\n\n<\/div>\n
\n
\nJamie Redman <\/h6>\n

\nJamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 7,000 articles for Bitcoin.com News about the disruptive protocols emerging today.

\n
\n
\n<\/a>
\n<\/span>\n<\/p>\n<\/div>\n<\/div>\n

Image Credits<\/b>: Shutterstock, Pixabay, Wiki Commons<\/em><\/p>\n

\n

Disclaimer<\/strong>: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com<\/a> does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.<\/p>\n<\/div>\n

\n