60 Federal Reserve announces the extension of its temporary U.S. dollar liquidity swap lines. Can someone please translate this into language a 7yr old can understand? (www.federalreserve.gov) posted 3 years ago by Aussie_Lurker 3 years ago by Aussie_Lurker +60 / -0 28 comments share 28 comments share save hide report block hide replies
OK, have I got this correct?...
The Fed swaps USD with say the Australian Central Bank at the current exchange rate.
The Fed now has AU dollars that are questionably more stable than USD?
Australian Central bank auctions said USD to highest bidding Aussie bank, theoretically at a profit to the CB?
Then the CB collects interest from Aussie banks & at the end of the contract swaps the USD back to AUD & pays back the Fed with interest?
Why oh why would any bank want to do this? Who benefits other than the Fed who is collecting interest?
It sounds to me like shenanigans. Or have I completely mis understood?
You got it all right!
Remy will give you a nice education on this in a few funny videos: https://www.youtube.com/watch?v=PhgGixOLn_Q ( All I Want For Christmas Is....)
https://www.youtube.com/watch?v=EoS52fVtVQM (Raise the Debt Ceiling Rap)
https://www.youtube.com/watch?v=Q4TKTPv2hqQ (Twenty Trillion Reasons!)
Those were great! TY for introducing Remy to me.