Allies in the Gulf and Asia have formally asked Washington for US dollar swap lines as markets feel the strain from the US‑Israel war on Iran, Treasury Secretary Scott Bessent told a Senate committee. He cited last October's $20bn swap for Argentina as a precedent, while Democrats warned the moves could expose taxpayers to costs.

What Bessent told senators Scott Bessent, United States Secretary of the Treasury, told the Senate Appropriations Committee that a number of allies in the Gulf and Asia have formally requested US dollar swap lines to shore up liquidity amid the economic shock from the US‑Israel war on Iran. He said the facilities — arrangements for central banks to exchange currencies — would help stabilise markets by ensuring access to dollars when strains emerge. "And swap lines, whether it's from the Federal Reserve or the Treasury, are to maintain order in the dollar funding markets and to prevent the sale of the US assets in a disorderly way," Bessent said during the budget hearing that also examined the fiscal implications of US support for partners during the conflict. Bessent did not name the countries that have asked for swap lines. He said requests have come from "numerous other countries, including some of our Asian allies," and argued such facilities would benefit both the US and the requesters. How swap lines work and the precedent Currency swap lines are a tool central banks use to supply each other with needed liquidity in a foreign currency — most often dollars. The mechanism lets a central bank borrow dollars from a foreign counterpart or from the Federal Reserve, then repay later, typically at a prearranged rate, calming short‑term funding markets and helping to prevent panic selling of dollar‑denominated assets. The Treasury also has the Exchange Stabilisation Fund (ESF), a separate vehicle authorised to back certain swap arrangements. Last October, the Treasury provided Argentina with a $20bn currency swap backed by the ESF, giving Buenos Aires temporary access to dollars during a turbulent election period. That facility was repaid, and Treasury officials have pointed to it as an example of using swaps to stabilise a partner without lasting exposure on the US balance sheet. Political pushback in Washington Democrats on the committee pressed Bessent on whether extending swap lines now would shift costs to US taxpayers and households. Senator Chris Van Hollen of Maryland warned the move could mean "over a billion dollars a day in taxpayer money," and linked it to higher fuel and consumer prices amid the wider economic fallout from the conflict. Van Hollen also raised concerns about the political optics of dealing with the United Arab Emirates given reported business ties between President Donald Trump and Gulf entities. "President Trump and his family have done a very brisk business with the UAE," he said, asking whether that relationship could be influencing policy. Bessent pushed back on suggestions that personal business ties were driving the Treasury's considerations. Analysts' view and the UAE angle Outside analysts said a swap line would be attractive to states seeking to signal financial stability and to strengthen ties to the United States. Rachel Ziemba, adjunct senior fellow at the Center for a New American Security, noted the UAE has sought to position itself as a global finance hub and that a US swap line can serve as a de facto seal of approval. Ziemba wrote that the UAE wants to be 'at the nexus of global financial hubs.'

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Bessent pointed to last October's $20bn ESF‑backed swap with Argentina as a recent example.

This article was created with AI assistance.