Kindleberger in retrospect: the Federal Reserve’s dollar swap lines and international lender of last resort rules

Author:

Carré Emmanuel1,Le Maux Laurent2

Affiliation:

1. Economics, University of South Brittany, Campus de Tohannic, Vannes 56000, France

2. Economics, University of Western Brittany, Rue des Archives, Brest 29200, France

Abstract

Abstract Our paper shows how Charles P. Kindleberger examined the function of the international lender of last resort and anticipated the rules governing the dollar swap line program (with unlimited amounts and at a fixed price) implemented by the Federal Reserve in the aftermath of the failure of Lehman Brothers in September 2008. We systematically explore Kindleberger’s works on the central bank swap agreement in order to discern the theoretical foundations of the international lender of last resort rules he proposed. In this respect, two of his arguments that appear concomitantly must be distinguished. The first concerns the burden that the leadership partly or mostly should shoulder because of the problem of free riding—this is the traditional argument of benevolent leadership. The second argument concerns the efficiency with which the leadership operates as the stabilizer given the international monetary and financial context—this argument of the efficient stabilizer has been far less studied in the literature. We find that the Federal Reserve was not a benevolent monetary institution, but the global financial stabilizer instead—meaning that Kindleberger’s second argument finally prevailed. We conclude by emphasizing how central bankers rediscovered Kindleberger’s contribution to the international lender of last resort function.

Publisher

Oxford University Press (OUP)

Subject

Economics and Econometrics

Reference124 articles.

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2. Central bank swap lines and cross-border bank flows;Aldasoro;Bank for International Settlements, BIS Bulletin,2020

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Cited by 3 articles. 订阅此论文施引文献 订阅此论文施引文献,注册后可以免费订阅5篇论文的施引文献,订阅后可以查看论文全部施引文献

1. La postérité de l’œuvre de Charles Kindleberger;Revue européenne des sciences sociales;2024

2. Bernanke and Kindleberger on financial crises, 1978–2003;Oxford Economic Papers;2023-05-05

3. Financial Instability and International-Lender-of-Last-Resort Theory from the Gold Standard to the Dollar System;Jahrbuch für Wirtschaftsgeschichte / Economic History Yearbook;2022-10-14

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