To address ongoing problems in interbank funding markets, the Federal Reserve has significantly increased the quantity of term funds it auctions to banks and accommodated heightened demands for temporary funding from banks and primary dealers. Also, to try to mitigate dollar funding pressures worldwide, we have greatly expanded reciprocal currency arrangements (so-called swap agreements) with other central banks.
A reduction in global risk appetite would eventually reduce net capital inflows into our markets and may dry up much needed FDI. If the US, which has a 25 per cent share of global GDP, slows down, it will definitely have an impact on the entire global economy, including East Africa.