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A new direction for the Federal Reserve
A new strategic vision for the Federal Reserve is emerging in the United States. Kevin Warsh, a former member of the Fed’s board and a potential future chairman of the institution, raised an issue during Congressional hearings that had remained on the fringes of the debate until now.
As reported by the Financial Times in an analysis by Gillian Tett, Warsh argued that the Fed should operate in close coordination with Treasury Secretary Scott Bessent and Secretary of State Marco Rubio, aligning monetary policy with the global objectives of the United States.
The Fed and geopolitics: the power of the dollar
Under this approach, the Fed would no longer be merely the guardian of inflation, financial stability and employment but would become an active instrument of foreign policy.
At the heart of this strategy lies the dollar, the reference currency of the global financial system. Using access to it as leverage means being able to influence international economic and political balances, thereby strengthening the role of the United States at a global level.
What central bank swap lines are
The main tool of this strategy is central bank swap lines. These are agreements that allow the temporary exchange of currencies, enabling a country to obtain dollars to support its banking system in times of financial stress.
Traditionally, swap lines have been regarded as technical and precautionary tools, activated only in times of emergency. However, in reality, they represent one of the most powerful mechanisms of the international monetary system.
Why swap lines are a lever of power
Whoever controls access to swap lines effectively control access to dollars, the key currency of global finance. This power makes it possible to:
- support struggling economies,
- reward strategic partners,
- exclude non-aligned countries from liquidity support.
For this reason, today swap lines are no longer seen as merely technical tools but as genuine levers of geopolitical influence.
Swap lines as a political tool
Under the Donald Trump administration, these lines are taking on an increasingly political dimension. They can be used to strengthen alliances or exert pressure on governments facing economic crises.
One example is Javier Milei’s Argentina, which in 2025 obtained approximately 20 billion dollars to stabilise its economy. Similar dynamics could also affect the Middle East, particularly countries such as the United Arab Emirates, involved in the tension with Iran.
The downsizing of the Fed’s role
A critical issue is the downsizing of the Federal Reserve’s independence. During this term, Trump has attempted to exclude it from both banking supervision as well as from the direct management of swap lines.
This signals a structural shift: tools that were originally designed to be technical and independent are becoming increasingly politicised, with potentially significant implications for global financial stability.
US strategy and the supremacy of the dollar
Scott Bessent himself has stated his intention to use swap lines to strengthen US influence and consolidate the dominance of the dollar.
This strategy could create significant tension with the European Union, which is already frequently at odds with Washington over international economic and monetary policies.
Risks to the global financial system
The greatest risk concerns the management of future global financial crises. In 2008, cooperation between central banks was made possible by trust in US leadership.
If swap lines were to become political tools today, a coordinated response to a new crisis could prove much more difficult, increasing market instability and weakening the entire international financial system.
