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Banks rush to tap new dollar liquidity facilities

IIF warns of major capital flight from emerging markets as demand for Fed-backed repos surges

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The Federal Reserve

The new 12-week dollar liquidity facilities offered by four major central banks and backed by the Federal Reserve saw strong demand today (March 18) in their first day of operations.

The opening of the facilities coincided with signs that dollar funding markets were tightening. One measure of stress, the Libor-OIS spread, hit its highest level since 2009 on March 16. The news came as the Institute of International Finance warned of major capital flight from emerging markets.

The Bank of

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