According to the Wall Street Journal:
FRANKFURT–Six of the world’s most important central banks have agreed to standing currency swap arrangements until further notice, the European Central Bank said Thursday.
The ECB, Federal Reserve, Bank of Canada, Bank of England, the Bank of Japan and Swiss National Bank announced “their existing temporary bilateral liquidity swap arrangements are being converted to standing arrangements,” the ECB said in a statement. Those arrangements would remain in place until further notice.
The deal comes after the ECB struck a three-year currency swap deal with the People’s Bank of China earlier this month. That swap arrangement will guarantee euro zone access to as much as 350 billion yuan ($57.1 billion). The PBOC will be able to tap EUR45 billion from the euro-zone’s central bank.
Swap lines enable central banks to deliver specific currency funding to banks, businesses and other institutions in their jurisdiction during times of market stress.
Under liquidity swap agreements central banks effectively lend each other their national currencies (in unlimited quantities) if needed.
In fact, liquidity swap agreements help commercial and investment banks to obtain foreign currency financing at most favorable terms.
In other words: It is an instrument to subsidize the banking apparatus, and an attempt to make banks churning out ever greater amounts of credit and fiat money.
Central banks are turning up the heat toward an outright inflation policy.
The Fed has actually produced a an education (read: propaganda) film on why liquidity swaps are “in the US national interest”: http://www.newyorkfed.org/education/liqswap.html