Some Russian banks from the international payment network of the International Interbank Communication Association (SWIFT)excludeThe decision to make could lead to overdue payments and huge overdrafts within the payments network, which could force financial authorities, including the United States, to supply dollars to the market again.
Credit Suisse Group strategist Zoltan Posser analyzed the impact of the decision to exclude some Russian banks from SWIFT on the money markets in a report released yesterday.
He noted similarities to the 2008 “Lehman shock” and the impact of the new coronavirus pandemic in March 2008 on the market, saying, “The central bank will once again market on the 28th. You should be ready to make. “
In his view, the current over-preparation and reverse repo facility are inadequate and financial authorities need to act. After all, the US Federal Reserve, which is moving towards balancing balance sheet compression through quantitative tightening (QT), could actually re-expand.
Federal Reserve Board (FRB) Headquarters in Washington
Photographer: Stefani Reynolds/Bloomberg
Original title:
SWIFT Ban Means the Fed May Need to Be Ready With Dollars(excerpt)