About $ trillion in worldwide dollar financing comes from foreign banks, $ billion in the form of loans within the U.S. For these banks to provide U.S. dollar loans, they have to maintain access to U.S. dollar funding. At a time when it is already hard enough for American families and firms to get the credit they need, we have a strong interest in making sure that these banks can continue to be active in the U.S. dollar markets. Banks headquartered outside the U.S. make extensive use of dollars in their financing activities. In part, this results from the fact that the U.S. dollar is the world’s number one currency – a status that brings with it many benefits for our country. It is in our national interest to make sure that non-U.S. banks remain able to access the U.S. dollar funding they need to continue financing their U.S. dollar assets. If access to dollar funding were to become severely impaired, this could necessitate the abrupt, forced sales of dollar assets by these banks, which could seriously disrupt U.S. markets and adversely affect American businesses, consumers and jobs. One way we can help to support the availability of dollar funding, and ensure that credit continues to flow to American households and businesses, is by engaging in currency swaps with other central banks. Such swaps are a policy tool the Federal Reserve has used to support dollar liquidity for nearly fifty years.
The ECB is a novel and unique institution and in the performance of its tasks it is still navigating uncharted waters. Take, for example, the differing impact of monetary policy on economic activity in the different euro area Member States, which demands a well-balanced and comprehensive consideration of the precise timing and magnitude of interest rate decisions. The ECB must formulate a single monetary policy for an economic area made up of 11 distinct national economic policy jurisdictions. Our monetary policy decisions must thus always be oriented towards the conditions of this currency zone as a whole, since monetary policy by its nature is one and indivisible. Precisely this is our Treaty mandate. The ECB must develop into a truly European institution and we are making good progress in that direction. However, developing a wider perception of the euro area as an entity appears more complicated. Certainly, there are some areas where awareness of a single “euro area economy” is well developed. The financial market operators, for instance, appear to have adapted very quickly to the reality of the euro. The extensive recourse to the more favourable financing opportunities in the now more unified financial market or the ongoing consolidation in the banking sector bear witness to this shift of perception from the national to the European level. In this context, allow me to add the following observation.