The U.S. Federal Reserve is extending its temporary U.S. dollar liquidity swap arrangements with several central banks around the word, including the Bank of Canada.

The Fed said Tuesday that it has authorized an extension of the temporary swap arrangements through Aug. 1, 2011, with the Bank of Canada, the Bank of England, the European Central Bank, the Bank of Japan, and the Swiss National Bank. The swap arrangements, which were established in May, were set to expire in January 2011.

The Bank of Canada and the Fed have agreed to extend their US$30 billion swap facility. In a statement, the Bank of Canada said that it “continues to judge that it is not necessary for it to draw on this swap facility at this time, but that it is prudent to maintain the agreement. Should the swap be drawn on, the details of the liquidity facilities provided would depend on the specific market circumstances at the time.”

The Bank of Canada added that it continues to “closely monitor” global market developments and remains committed to providing liquidity as required to support the stability of the Canadian financial system and the functioning of financial markets generally.

IE