December 15, 2011 / 11:51 PM / 7 years ago

Dudley: Fed's dollar lines shield U.S. from Europe

WASHINGTON (Reuters) - The Federal Reserve put in place dollar swap lines with overseas central banks to help protect the U.S. economy from the potential risk of a big selloff in dollar assets, the head of the New York Federal Reserve Bank said.

New York Fed President William Dudley, in testimony to Congress released on Thursday, said the currency swap lines were aimed at ensuring banks outside of the United States could access dollar funds and prevent a firesale of assets that could dry up credit for U.S. households and businesses.

“If the access to dollar funding were severely impaired, this would necessitate the abrupt forced sales of dollar assets by these banks, which could seriously disrupt U.S. markets and adversely affect U.S. businesses, consumers and jobs,” Dudley said in remarks prepared for a hearing scheduled for Friday.

Reporting by Timothy Ahmann and Mark Felsenthal; Editing by Andrew Hay

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