The currency swap lines that central banks set up among themselves have also been shut down.
The central banks are fighting to prevent this from happening (cross currency swap lines with each other and low swap rates).
Because interbank markets are global in scope, the Federal Reserve has also approved bilateral currency swap agreements with 14 foreign central banks.
The Bank and the People's Bank of China are close to signing a three-year currency swap arrangement, governor Sir Mervyn King said.
The currency swap program is now one-sixth the size of QE2, which signals that short-term U.S. dollar funding markets remain extremely strained.
There, according to the Chinese Foreign Ministry, the leaders discussed the currency swap and foreign-exchange reserve pool ideas with their Russian, Indian and Brazilian peers.
Mr Buiter acknowledges that Britain has access to currency swap lines from the world's biggest central banks, which would help it prevent a run on the banks.
South Korea and Japan, which are also squabbling over an island, decided not to renew an emergency currency-swap facility.
Japan is mulling whether to renew a currency-swap agreement that expires in October.
All three countries are looking to China for support: Venezuela and Ecuador have signed investment agreements, and Argentina has a currency-swap line aimed at reducing its need for dollars.
Regardless of the amount of difficulty involved, the big four emerging markets plus South Africa said earlier this week they were considering setting up a foreign-exchange reserve pool and a currency-swap arrangement in an effort to avoid any credit crisis stemming from the advanced economies.
Acquirers are paying more, but they are doing so painlessly, since their own shares, which serve as their currency in stock-swap transactions, are as inflated as those of their prey.
Quite apart from the risk that some crisis in a currency or stock or credit swap market could cause a meltdown on Wall Street, there is the risk that the public could turn against securities firms, especially those that so visibly wear multiple hats.
The main instruments are bilateral swap agreements among major nations so that any country can draw on any currency as needed.
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