The major central banks of the Group of Seven (G7) nations said that it would be making the emergency currency-swap lines permanent. The cash crisis mechanism was introduced during the 2007 global financial crisis, according to a report by Bloomberg. The currency-swap lines were created to provide backstops to secure member states against future financial shocks. The central banks involved are the European Central Bank, the U.S. Federal Reserve, the Bank of Canada, the Bank of England, and the Bank of Japan. The Swiss National Bank would also be part of the framework, the report said. The bilateral arrangements between these banks would reportedly allow lenders gain access to global currencies whenever necessary.
"The existing temporary swap arrangements have helped to ease strains in financial markets and mitigate their effects on economic conditions. The standing arrangements will continue to serve as a prudent liquidity backstop," Frankfurt-based European Central Bank told Bloomberg.
The decision to make permanent the currency-swap lines came after the U.S. Federal Reserve started tapering its monetary stimulus.
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