Wednesday, November 30, 2011

Kindleberger Smiles

. Wednesday, November 30, 2011

The banks announced that they would reduce by roughly half the cost of an existing program under which banks in foreign countries can borrow dollars from their own central banks, which in turn get those dollars from the Fed. The banks also said that loans will be available until February 2013, extending a previous endpoint of August 2012. 
“The purpose of these actions is to ease strains in financial markets and thereby mitigate the effects of such strains on the supply of credit to households and businesses and so help foster economic activity,” the banks said in a statement. The participants in addition to the Fed were the Bank of England, the European Central Bank, the Bank of Japan, the Bank of Canada and the Swiss National Bank.
More here. The title refers to the previous post.


Jeremy said...

Wouldn't the wide number of central banks participating in this sort of undermine hegemonic stability theory? Or does the Fed's central role in all of this still validate the model?

Kindred Winecoff said...

Jeremy -

I think it's about the structure of the international monetary system. All of this is about pumping US dollars into global financial markets, not yen or yuan or even euros. Kindleberger referred to this sort of liquidity-provision in his "responsibilities of the hegemon" chapter.

Jeremy said...

Ah, thank you. I admit I haven't read Kindleberger directly, just a few articles discussing HST, and those articles focused on tariff levels and trade in goods and services.

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