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The FED, ECB, and other entities have collaborated to implement synchronized measures aimed at increasing the availability of US dollars
On Sunday, the U.S. Federal Reserve (Fed) announced that it had teamed up with other major central banks to ensure a consistent supply of the U.S. dollar, which is a predominant reserve currency, throughout the global financial system.
To achieve this goal, the Fed plans to increase the frequency of the dollar swap lines with several central banks, including the European Central Bank, the Bank of Japan, the Bank of England, the Bank of Canada, and the Swiss National Bank, from weekly to daily, starting from Monday.
The dollar swap lines allow foreign central banks to borrow U.S. dollars while minimizing the Fed’s downside risks.
The process involves a foreign central bank swapping its own currency for an equivalent amount of U.S. dollars from the Fed at the market exchange rate.
At a predetermined time, the central bank returns the borrowed dollars, with interest, to the Fed.
The purpose of this move is to stabilize exchange rate fluctuations and prevent disruptions in the supply of credit to households and businesses around the world.
It comes in response to the recent collapse of three U.S. banks and the takeover of troubled Swiss lender Credit Suisse by UBS and the Swiss National Bank.
Historically, the dollar swap lines have had a negative impact on the value of the dollar.
Risk assets, including Bitcoin, typically move in the opposite direction of the US currency.
During the global rush for liquidity that occurred during the March 2020 market crash caused by the coronavirus pandemic, the dollar index rose above 100 while Bitcoin plummeted by more than 50%.
UBS has agreed to acquire Credit Suisse for a sum exceeding $2 billion
UBS has raised its bid to over $2 billion to acquire Credit Suisse, and Swiss authorities are planning to amend the country’s laws to circumvent a shareholder vote and finalize the deal before Monday.
Two individuals with knowledge of the matter said that as part of the agreement, the Swiss National Bank has agreed to provide a $100 billion liquidity line to UBS.
Additionally, UBS has agreed to a modification of the material adverse change clause, which would invalidate the deal if its credit default spreads increase.
The clause would be in effect from the time the deal is signed until it is completed, according to the sources.
Special legislation to govern cryptocurrency is soon to be implemented in Taiwan
The Financial Supervisory Commission (FSC) of Taiwan will soon be appointed to regulate cryptocurrency through special legislation, as confirmed by Huang Tien-mu during a hearing on global banking stability in Taiwan’s parliament.
Initially reported by Bloomberg, the FSC’s role as the regulator was based on sources in the legislature.
According to reports, the FSC will not be responsible for regulating NFTs.
Huang, from the FSC, was quoted by local Taiwan media as saying that it is too early to regulate NFTs since they are still emerging as an asset class.
In the past, Taiwan has adopted a hands-off approach to cryptocurrency regulation, with the asset class only being regulated in the context of combating money laundering.
However, the collapse of FTX has added urgency to Taiwan’s regulatory efforts as Taiwanese users were among the exchange’s largest per capita, drawn to its relatively high USD deposit rates compared to local banks.
An initial framework for the legislation is expected to be in place by June, with an initial draft expected later this year.
Conclusion
Overall, March 19th was a busy day due to statements from the FED, ECB, and others, despite the fact that it was Sunday.
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