What are past examples of U.S. swap lines with emerging markets and how did those operations perform?

1. What “swap lines” to emerging markets looked like in practice

During the Global Financial Crisis the Federal Open Market Committee expanded its reciprocal currency arrangements beyond advanced economies and in October 2008 explicitly included five central banks that the Fed judged large or systemically important among emerging markets and other non‑core jurisdictions—the Bank of Brazil, the Bank of Korea, the Bank of Mexico, the Monetary Authority of Singapore and the Bank of New Zealand—so those central banks could obtain dollar funding to lend to domestic financial institutions ^{[1] [2] [4]}.

2. How these operations were used and how big they became

Swap drawings surged in the crisis: outstanding drawings on Fed swap lines peaked in December 2008 at over $580 billion—about a quarter of the Fed’s balance sheet at the time—before many lines were wound down and later reauthorized as strains reappeared, illustrating the temporary but massive scale of the dollar backstop the Fed provided ^{[2] [5]}.

3. Measured effects: liquidity, dollar strength and market functioning

Empirical and central‑bank accounts attribute clear short‑term benefits to the swap operations: the facilities reduced offshore dollar borrowing costs, supplied large amounts of dollar liquidity to overseas markets, and helped reverse safe‑haven dollar appreciation during acute phases of both the GFC and the COVID‑19 shock—effects documented in Federal Reserve Bank analyses and regional Fed research ^{[6] [3] [5]}.

4. Performance in emerging‑market recipients: stabilization but not a cure

Academic and policy work shows that swap access reduced the likelihood of disorderly asset sales and contagion in jurisdictions that received dollars, and that recipients with weaker external positions were more likely to seek or renew such bilateral swap lines—suggesting the tool helped stabilize borrowing but did not remove underlying balance‑of‑payments vulnerabilities ^{[7] [8]}.

5. Limits, controversies and geopolitical context

The Fed’s choice of counterparties drew criticism: some policymakers and outside observers argued emerging markets excluded from lines (for example, India before the pandemic) suffered an uneven safety net, a critique labeled by a former central‑bank governor as “virtual apartheid,” and scholars note the swap network is both a crisis backstop and an instrument of U.S. monetary governance with geopolitical implications ^{[9] [10]}.

6. Evolution since the crisis and lessons on effectiveness

After the GFC the Fed turned most standing swap relationships into arrangements with major advanced central banks, while in 2020 the Fed temporarily widened access during the COVID‑19 shock and again provided very large dollar liquidity—about $450 billion of balance‑sheet expansion during the early pandemic period was via swap lines—demonstrating the instrument’s adaptability as an emergency dollar lender of last resort ^{[6] [11] [3]}.

7. What the records do and do not show

Available Fed, central‑bank and academic sources consistently show swap lines with selected emerging markets provided meaningful short‑run relief in dollar markets and reduced systemic spillovers, but the public record in these sources does not fully detail each emerging market’s individual draw amounts, timing or the precise macroeconomic trade‑offs inside recipient countries—limitations that constrain assessments of long‑term effectiveness and distributional impacts ^{[1] [5] [7]}.

8. Bottom line for policy and future crises

Past episodes demonstrate swap lines to emerging markets can be powerful crisis‑management tools: they supply emergency dollar liquidity, tamp down disorderly asset sales, and protect global credit flows, yet their deployment raises questions about selection criteria, moral hazard and geopolitical signaling that are unresolved in the cited literature and official accounts ^{[8] [9] [3]}.