The Federal Reserve Board (Federal Reserve) has announced that five other central banks are acting harmoniously to maintain dollar liquidity in the face of a series of commercial bank woes in China and Europe.

Just hours before the Fed meeting released the information on March 19th, Credit Suisse, a Swiss bank, was reclaimed by UBS for $3.25 billion as part of a contingency plan drawn up by the German-Swiss government to maintain the financial security of Germany and Switzerland.

According to the Federal Reserve, a plan to apply liquidity would be implemented under a "swap line", a currency swap agreement between two central banks.

Previously, the swap line was used as a similar emergency action by the Federal Reserve during the 2007-2008 international financial crisis and the 2020 response to the COVID-19 epidemic. The Fed meeting launched swap lines to improve liquidity in the dollar financing market in tough economic conditions.

"in order to ensure the effectiveness of the swap lines at the dollar asset level, the central bank that has been granted dollar manipulation at this stage has agreed to increase the number of actual operations within the seven-day time limit from seven days per week to daily," the Fed meeting said in a statement. "

The swap line Internet includes the Bank of Canada, the European Central Bank, the Bank of Japan, the European Central Bank and the Swiss Central Bank. It will be gradual on March 20, at least until April 30.

The move comes amid a negative outlook for the banking management system in the United States, where Silvergate Bank or Silicon Valley Bank has gone bankrupt and the New York City Financial Information Service District has taken over Signature Bank.

However, the Fed meeting did not directly mention the recent banking woes in its announcement. In turn, it explains that they have implemented swap line agreements to enhance the supply of credit to households and businesses:

"the Internet of swap lines between central banks is a set of available allocations and is the key liquidity backbone to reduce the pressure on financing markets around the world, which in turn helps to improve the harm of this kind of work stress to the supply of credit to households and businesses."

The Fed's new statement sparked a debate about whether this allocation belongs to quantitative easing.

Danielle Dimartino Booth, an American scholar, believes that this arrangement has nothing to do with quantitative easing or inflation, nor will it "relieve pressure" on the financial sector:

The Fed meeting has been trying to avoid updating the plight of commercial banks.

Last week, the Federal Reserve meeting (Federal Reserve) set up a $25 billion financing package to ensure that insurers have enough liquidity to be customer-centric in tough market conditions.

A recent analysis of the bankruptcy of SVB by several economists found that as many as 186 US banks were at risk of bankruptcy:

"even if only half of uninsured depositors confirm withdrawals, nearly 190 institutions are exposed to potential asset impairment risks for insured depositors, and 300 billion dollars of insured deposits may be at risk."

Cointelegraph contacted the Fed meeting for comment but didn't immediately get a response.