Bank of Canada Announces Expansion of the Swap Facility with U.S. Federal Reserve as part of Coordinated Central Bank Actions

In response to continued strains in short-term funding markets, central banks today are announcing further coordinated actions to expand significantly the capacity to provide U.S. dollar liquidity. Central banks will continue to work together closely and are prepared to take appropriate steps as needed to address funding pressures.

Bank of Canada Action

The Bank of Canada and the Federal Reserve have agreed to expand their swap facility (reciprocal currency arrangement) to US$30 billion from the US$10 billion announced on 18 September. This facility would be accessed, should the need arise, to provide U.S.– dollar liquidity in Canada. If drawn on by the Bank of Canada, the swap would provide liquidity facilities for use by financial institutions in Canada. This swap facility expires on 30 April 2009.

This agreement provides the Bank of Canada with additional flexibility to address rapidly evolving developments in financial markets. The Bank judges that it is not necessary for it to draw on this swap facility at this time, but that it is prudent to have the agreement in place. Should the swap be drawn on, the details of the liquidity facilities provided would depend on the specific market circumstances at the time.

The Bank of Canada continues to closely monitor global market developments and remains committed to providing liquidity as required to support the stability of the Canadian financial system and the functioning of financial markets.

Information on Related Actions Being Taken by Other Central Banks

Information on the actions taken by other central banks is available at the following websites.

Bank of England
Bank of Japan
Bank of Norway
Bank of Sweden
European Central Bank
Federal Reserve System
National Bank of Denmark
Reserve Bank of Australia
Swiss National Bank

For further information, please contact:
Jill Vardy
613 782-8782