US Fed officials propose prolonging dollar swap lines to underpin stability

FRANKFURT - Some U.S. Federal Reserve officials proposed extending a critical, international supply line of U.S. dollars to underpin financial stability, according to an account of their recent meeting.

The discussion centred on extending so-called U.S. dollar swap lines, which the Fed has with five major central banks and has become a key backstop for global banking since the financial crisis.

The debate unfolded as the globe faces heightened instability and spiralling energy costs, driven by a war between the United States, Israel and Iran.

The discussion also comes amid growing apprehension towards Washington and how much the United States can be relied upon both for military defense, as well as in finance with a backup of lenders with dollars, the lifeblood of international trade and finance.

Incoming Federal Reserve Chair Kevin Warsh's suggestion that independence may not extend fully to the Fed's crisis-fighting role abroad has unsettled central banking peers in Europe.

As it stands, the so-called dollar swap lines with five central banks -- from the Bank of Japan to the European Central Bank -- are reinstated annually. Some officials, however, suggested changing this.

They proposed extending these dollar lines beyond the current annual rollover in the interests of financial stability, according to the minutes of the April 28-29 meeting of the Federal Open Market Committee.

"A few participants commented on the possibility that the Committee could consider extending the terms of swap lines beyond one year, noting that a longer extension would be beneficial for financial stability," the minutes showed.

In response to a question from Democratic Senator Elizabeth Warren about whether the Fed could disagree with Treasury on swap lines, or act independently, some observers have argued Warsh was cryptic in his written answer.

"Fed independence is at its peak in the operational conduct of monetary policy," Warsh wrote.

"Fed officials are not entitled to the same special deference in areas affecting international finance, among other matters. In those matters, the Fed will work with the Administration and with Congress."

(Reporting byJohn O'Donnell. Editing by Elisa Martinuzzi and Toby Chopra)

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This story was originally published May 21, 2026 at 8:22 AM.