Cherry-Picking in Central Bank Currency Swaps: Empirical Insights into the Determinants and Income Bias in Swap Access during Crises

Published: 29 April 2024| Version 1 | DOI: 10.17632/ft2smxv472.1
Thomas Goda,


Replication dataset for "Cherry-Picking in Central Bank Currency Swaps: Empirical Insights into the Determinants and Income Bias in Swap Access during Crises" Abstract Since the 2007-9 global financial crisis, central bank currency swaps have become a crucial element of the Global Financial Safety Net (GFSN) – the set of institutions and arrangements that backstop countries in financial distress. Considering the uneven distribution of swaps among countries, our study empirically investigates the determinants of access to swaps, employing logistic panel regressions on a comprehensive novel swap dataset covering 194 countries from 2007-2022. The width of this dataset allows us to verify the effect of crisis indicators, country-specific variables and bilateral relations. By analyzing swaps provided by all central banks, the results indicate that both the US Federal Reserve and the People’s Bank of China act as quasi-international lenders of last resort, distinguishing these institutions from other swap providers. However, contrary to prior assumptions, we find that a country’s income level is a more significant factor in securing access to swaps than crisis status or external debt levels: advanced economies are more likely to receive swaps during crises than middle-income countries, and low-income countries are completely excluded from swaps. Other important determinants of swap access are economic size, country risk, trade agreements and geographical closeness. Finally, the results point to the interaction between different elements of the GFSN, showing that unconditional IMF lending lowers the likelihood of access to a central bank swap. Overall, these findings provide a better understanding of the dynamics of central bank swaps as a crisis finance instrument, which is crucial for evaluating the resilience of the international financial system and ensuring adequate support for all countries facing financial distress. Furthermore, they highlight potential gaps in the GFSN and raise questions about its inclusivity and efficacy in addressing systemic shocks and economic vulnerabilities. Addressing these flaws is crucial for sustained global economic growth and achieving the United Nations Sustainable Development Goals.


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Universidad EAFIT, Boston University, Freie Universitat Berlin Lateinamerika-Institut


Financial Economics, Financial Crisis, Central Banking, International Monetary Arrangement, International Monetary Institution