As a result, U.S. dollar funds-supplying operations are mutually beneficial for both the Fed and other central banks. That point is markedly different from “international policy coordination” in monetary policy, easily placing strain on bilateral relations in key variables, such as foreign exchange rates and the balance of payments.
Through the current crisis, we have reconfirmed that it is important to make currency swap, repo, and other collateralized markets more robust, and that central banks need to promote private initiatives in that direction. From that perspective, central banks need to make further coordination in providing liquidity, accepting cross-border collateral, and extending operating hours for the payment and settlement systems provided by central banks.