The Bank of Canada confirmed Wednesday that its temporary swap facility with U.S. Federal Reserve will expire on Feb. 1, one more sign that the extreme stress accompanying the financial crisis is fading.

In addition, European Central Bank, Bank of England, Bank of Japan, and Swiss National Bank also confirmed that their temporary U.S. dollar swap facilities would be allowed to expire.

“This facility, which was established to counter pressures in global funding markets, is no longer needed, given the improvements in financial market functioning seen over the past year. Central banks will continue to cooperate as needed,” the banks said in a statement.

In Canada, the swap facility was originally established in September 2008, and was amended in June 2009. “Although the facility was not drawn on, the Bank of Canada did judge that it was prudent to have the agreement in place, in order to provide it with additional flexibility to address rapidly evolving financial market developments at that time,” the Bank said.

Additionally, in its latest policy rate decision, the Fed indicated that it will be scaling back other liquidity provision mechanisms.

The Federal Open Markets Committee said Wendesday that it is gradually slowing the pace of its purchases of US$1.25 trillion of agency mortgage-backed securities and about US$175 billion of agency debt. It anticipates that these transactions will be executed by the end of the first quarter.

Also, in light of improved functioning of financial markets, the Fed said it will be closing the asset-backed commercial paper money market mutual fund liquidity facility, the commercial paper funding facility, the primary dealer credit facility, and the term securities lending facility on February 1, as previously announced. The Fed is also in the process of winding down its term auction facility: US$50 billion in 28-day credit will be offered on February 8, and US$25 billion in 28-day credit will be offered at the final auction on March 8. The anticipated expiration dates for the term asset-backed securities loan facility remains set at June 30 for loans backed by new-issue commercial mortgage-backed securities, and March 31 for loans backed by all other types of collateral. The Fed added that it is prepared to modify these plans if necessary to support financial stability and economic growth.