cheguevara
12-28-2011, 02:54 PM
In late November, Presidential candidate Ron Paul wrote an article accusing the US Federal Reserve of implementing a backdoor bailout of European banks through the lowering of swap-rates between its currency and the US dollar. On December 28th, a former Vice-President of the Dallas reserve bank joined in agreement with the Texas Congressman, and specified that the Fed did actually use its power to bailout European banks through its currency swap program.
America's central bank, the Federal Reserve, is engaged in a bailout of European banks. Surprisingly, its operation is largely unnoticed here.
The Fed is using what is termed a "temporary U.S. dollar liquidity swap arrangement" with the European Central Bank (ECB). There are similar arrangements with the central banks of Canada, England, Switzerland and Japan. Simply put, the Fed trades or "swaps" dollars for euros. The Fed is compensated by payment of an interest rate (currently 50 basis points, or one-half of 1%) above the overnight index swap rate. The ECB, which guarantees to return the dollars at an exchange rate fixed at the time the original swap is made, then lends the dollars to European banks of its choosing. – Wall Street Journal
http://www.examiner.com/finance-examiner-in-national/former-fed-official-joins-ron-paul-accusing-the-bank-of-bailing-out-europe
America's central bank, the Federal Reserve, is engaged in a bailout of European banks. Surprisingly, its operation is largely unnoticed here.
The Fed is using what is termed a "temporary U.S. dollar liquidity swap arrangement" with the European Central Bank (ECB). There are similar arrangements with the central banks of Canada, England, Switzerland and Japan. Simply put, the Fed trades or "swaps" dollars for euros. The Fed is compensated by payment of an interest rate (currently 50 basis points, or one-half of 1%) above the overnight index swap rate. The ECB, which guarantees to return the dollars at an exchange rate fixed at the time the original swap is made, then lends the dollars to European banks of its choosing. – Wall Street Journal
http://www.examiner.com/finance-examiner-in-national/former-fed-official-joins-ron-paul-accusing-the-bank-of-bailing-out-europe