Transcripts of the monetary policymaking body of the Federal Reserve from 2002–2008.

Well, I just want to point out that I think these are absolutely the right kinds of questions about this. But I think these concerns are substantially mitigated by the fact that the IMF is putting in place a facility at basically the same time, which will be there with relatively little stigma for a range of other countries that need it. There will be a universe of other countries that would not meet the test for eligibility for this swap type of facility, for the IMF or us, that will have to go through a program with conditionality and a bunch of adjustments such as Iceland is going through or Hungary will go through.

So it is right to raise these questions. But the boundary problems around our swap lines are substantially mitigated by the fact that there is a new facility coming out that’s going to the same place. Raising the question of why we need to do our swaps is good, too, but you’ve heard lots of good arguments for that, and I think that realistically there’s a natural division of labor between what central banks have classically done with each other in the swap context and what the IMF does. What we’re doing is a natural extension of what central banks do. The IMF is moving a little further in from where they are in this case, and I think that will mitigate some of the signaling problems and uncertainty created by having this evolution in the scope of swap lines.

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