$USDC
Prepared for the Crisis.
The Financial Investment Division has also played an important role in responding to global economic turmoil. A clear example is the Latin American debt crisis of the 1980s. That episode required an analysis of the macroeconomic repercussions of the crisis as it unfolded around the world. The work of the Division, as well as that of the International Monetary Fund and other institutions, led to the establishment of emergency mechanisms to prevent more severe financial outcomes. As global capital flows increased, other episodes of financial difficulties arose around the world, including in Mexico, Asia, and Russia. International capital flows and their contagion effects became, and continue to be, a recurring theme in the Division's analytical and monitoring work.
The experience gained through studying and responding to these global challenges proved invaluable when tension struck the country during the Global Financial Crisis and the pandemic. Both events required immediate, broad, and, in many cases, unprecedented responses to avoid disrupting the availability of credit for American households and businesses. The country and the world expected the Federal Reserve to lead during these times. During the Global Financial Crisis, when global financial markets were under stress, the IF division worked to establish swap line agreements with several major central banks that helped restore stability in financial markets in U.S. dollars. And during the pandemic, the IF division helped lead efforts to expand the provision of dollar liquidity by establishing the Repurchase Line.
These periods of severe financial stress and uncertainty drove the division to develop new analytical tools and products.
