By Leika Kihara
TOKYO (Reuters) - Major central banks across Europe and Japan will reduce the frequency of their seven-day dollar liquidity-providing operations from July as the market tension caused by the coronavirus pandemic has eased, the Bank of Japan said on Friday.
In view of improvements in U.S. dollar funding conditions and after consulting with the U.S. Federal Reserve, the Bank of England, the Bank of Japan, the European Central Bank and the Swiss National Bank have jointly decided to reduce the frequency of their seven-day operations from daily to three times a week, the BOJ said in a statement.
The change will take effect on July 1, it said.
"These central banks stand ready to re-adjust the provision of U.S dollar liquidity as warranted by market conditions," the statement said.
"The swap lines among these central banks are available standing facilities and serve as an important liquidity backstop to ease strains in global funding markets," it said.
In a bid to address the market turbulence caused by the pandemic, the Fed in March increased the frequency of seven-day maturity operations from weekly to daily as part of its swap line arrangements with the major central banks.
Dollars were in huge demand in March and supply was tight, but conditions have stabilised recently after a raft of measures taken by major central banks to ease market jitters over the fallout from the pandemic.