US Fed to allow foreign central banks to swap debt for cash

The Federal Reserve announced a new facility Tuesday that will allow foreign central banks to temporarily swap debt holdings for US dollars.

Amid the cash crunch and increased demand for dollars caused by the uncertainty around the coronavirus pandemic, the Fed's "FIMA repo facility" will allow central banks to exchange US Treasury debt for cash, rather than selling them for bargain prices.

Along with dollar swap lines the Fed already put in place for major central banks, this operation, which begins April 6, will "help support the smooth functioning of financial markets ... and thus maintain the supply of credit to US households and businesses," the Fed said in a statement.