Bitcoin and gold spike as central banks coordinate efforts to halt the banking contagion Bitcoin BTC gold
- Five of the world's top central banks, including the Federal Reserve, the European Central Bank, the Swiss National Bank, the Bank of Canada and the Bank of England, have announced a coordinated effort to keep U.S. dollars flowing through the global financial system amid the biggest banking crisis since 2008.
“To improve the swap lines' effectiveness in providing U.S. dollar funding, the central banks currently offering U.S. dollar operations have agreed to increase the frequency of 7-day maturity operations from weekly to daily,” the release said. “These daily operations will commence on Monday, March 20, 2023, and will continue at least through the end of April.”
The new swap line agreement between the five central banks started operation on Monday and will continue to operate until April 30 at the earliest, with the potential for it to remain open longer. The ultimate goal of the switch to daily 7-day maturity operations is to help calm exchange rate volatility and avoid strains in the supply of credit.
While a variety of factors have contributed to the unfolding bank contagion, the main culprit is the Federal Reserve and its aggressive interest rate hikes, done to tamp down inflation. The Fed has raised borrowing costs by 450 basis points since March 2022, which has hit asset markets hard.
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