Rethinking the global financial safety net

Speech by Mr Agustín Carstens, General Manager of the BIS, Sixth High-Level Regional Financing Arrangements (RFA) Dialogue, 12 October 2021.

BIS speech  | 
12 October 2021

The US dollar dominates international financial markets and trade. This facilitates trade and financial flows across countries, but also gives rise to vulnerabilities as highlighted by the Covid-19 crisis. In March 2020, central bank liquidity support, including through the Federal Reserve swap lines, averted a full-blown dollar funding crisis. The episode highlighted the importance of an international lender of last resort. Going forward, we need a resilient global financial safety net that does not rely solely on the Federal Reserve. This safety net will need to be strengthened via robust regional and global arrangements, including a strong role for the IMF. It also needs to consider the rising role of non-bank financial intermediaries and market-based finance, adjusting facilities that provide liquidity if necessary.