The global network of liquidity lines

At the end of 2025, there were 177 cross-border liquidity lines between central banks connecting countries that accounted for 81% of world GDP. This paper maps the evolution of these arrangements since 2000. We show that the lines form a network through which banks can indirectly obtain access to the USD even when their central bank has no agreement with the Federal Reserve. These indirect connections give the People’s Bank of China a central role and show the fragility of liquidity provision to geopolitical tensions. We present cross-country evidence that the indirect connections reduce CIP deviations at the tails, and causal evidence that liquidity lines are substitutes to FX reserves. • A new comprehensive dataset of central bank cross-border liquidity lines 2000-25. • A historical account of the evolution of liquidity lines across time and countries. • A country can indirectly access foreign liquidity even without a direct line to the source. • Indirect connections through the network are associated with lower CIP deviations. • Improvement in network access to foreign liquidity causally lowers FX reserves.

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Publication Details

Journal
Journal of International Economics
Published
2026-04-02
DOI
https://doi.org/10.1016/j.jinteco.2026.104255
Primary Topic
Banking stability, regulation, efficiency
Type
article
Field-Weighted Citation Impact
0.00

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article

The global network of liquidity lines

Journal of International Economics
Banking stability, regulation, efficiency
article

The global network of liquidity lines

article en

Abstract

At the end of 2025, there were 177 cross-border liquidity lines between central banks connecting countries that accounted for 81% of world GDP. This paper maps the evolution of these arrangements since 2000. We show that the lines form a network through which banks can indirectly obtain access to the USD even when their central bank has no agreement with the Federal Reserve. These indirect connections give the People’s Bank of China a central role and show the fragility of liquidity provision to geopolitical tensions. We present cross-country evidence that the indirect connections reduce CIP deviations at the tails, and causal evidence that liquidity lines are substitutes to FX reserves. • A new comprehensive dataset of central bank cross-border liquidity lines 2000-25. • A historical account of the evolution of liquidity lines across time and countries. • A country can indirectly access foreign liquidity even without a direct line to the source. • Indirect connections through the network are associated with lower CIP deviations. • Improvement in network access to foreign liquidity causally lowers FX reserves.

Journal of International EconomicsVol. 161
Laser Scan Engineering (United Kingdom) (GB)
UK Research and Innovation
Decent work and economic growth
Openalex Percentile: Top 21%
Banking stability, regulation, efficiency
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