A currency swp can be performed in different ways. Many swaps use only fictitious capital, which means that capital amounts are used to calculate interest due and payable by period, but are not exchanged. Both the State Department and the Treasury were consulted on countries that meet the Fed`s criteria that “increased pressure in [these countries] could trigger unwelcome radiation for both the U.S. economy and the international economy in general.” The minutes of the FOMC meeting at which the final decision was made show that members had very specific concerns, such as whether countries with large mortgage-backed securitizations issued by Fannie Mae and Freddie Mac could be tempted to eliminate them all at the same time if they did not have access to the dollar. , which would increase mortgage rates and hinder the recovery in the United States. In his book International Liquidity and the Financial Crisis, William Allen gives estimates for a number of countries on the gap between the level of bank liabilities in a given currency, which was to be refinanced, and the funds available for that purpose. Among emerging countries, brazil`s banking system had the largest dollar deficit and the Korean banking system was the largest dollar deficit among Asian banking systems. The Fed traded lines to emerging markets, such as developed economies, helped close those dollar spreads and lowered the dollar`s interest rates. Initially, the ECB said it was prepared to make available to Hungary, Latvia and Poland only through euro banknotes, in which bonds are held as collateral rather than money, but which have finally expanded a normal trading line to Hungary. Switzerland has also made Swiss francs available to Poland and Hungary for euros. Many households in Poland and Hungary had taken out foreign-currency-denominated mortgages as a result of lower interest rates. The demand for Swiss francs and euros from the Hungarian and Polish banks that provided the loans increased the cost of credit in these currencies; Swap lines were supposed to ease the upward pressure on euro and franc interest rates.

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