Central Bank Swap Lines (CBSL) or Central Bank Liquidity Lines (Central Bank Currency Swap Mechanism) is a tool proposed and established by the US Federal Reserve (Fed) together with other Central Banks, to prevent the risk of contagion of liquidity crises from a major economy spreading to the US or globally.
CBSL is not a new tool. Fed has used this tool (or similar) many times in financial crises impacting globally. For example, before the Bretton Woods system collapsed, the crisis after the 09/11 bombing, the 2008 Financial Crisis, and the sovereign debt crises in Latin America or Europe...
And recently, last year, CBSL was again used by Fed with 5 major Central Banks, during the crisis following the collapse of SVB.
