| |
| author |
Julien Hryshko
| | title |
Central Bank Liquidity Swaps of the Financial Crisis: An Analysis of Long-Term Financial Instability
| | abstract |
This thesis sheds light on the often-overlooked Federal Reserve (Fed) policy
measure, central bank liquidity swap lines, which were implemented during the financial
crisis. The thesis provides an overarching and detailed analysis of how and why the
liquidity swaps were used. Although the liquidity swaps were initially established as an
emergency measure, the primary focus of my thesis is on their impacts as a normal part
of American monetary policy. In my analysis of the liquidity swaps, I establish the
critique that the swaps extended over a long time horizon and uncapped in amount, could
create an issue of moral hazard on a global scale. Using the Financial Instability
Hypothesis (FIH) of economist Hyman Minsky, I explain how such a scenario is likely to
occur. The FIH also aids in explaining current relations throughout the global financial
system, to which, the liquidity swaps are of great importance. A brief summary of
Minsky's place within the realm of economic thought is established to provide context on
the importance of his theories and their relation to my critique of the liquidity swaps.
Finally, I provide analysis of Federal Open Market Committee (FOMC) meeting minutes
from three key dates pertaining to the liquidity swaps.
| | school |
The College of Liberal Arts, Drew University
| | degree |
B.A. (2019)
|
| advisor |
Bernard Smith
|
| committee |
Marc Tomljanovich
Jason Jordon
|
| full text | JHryshko.pdf |
| |
