The 2025 Review of The Short-Term Liquidity Line

The 2025 Review of The Short-Term Liquidity Line
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Volume/Issue: Volume 2025 Issue 046
Publication date: December 2025
ISBN: 9798229032896
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Topics covered in this book

This title contains information about the following subjects. Click on a subject if you would like to see other titles with the same subjects.

Banks and Banking , Exports and Imports , Finance , Money and Monetary Policy , Liquidity , Financial safety nets , Balance of payments need , Capital flows , Lines of credit , Capital account

Summary

The Short-term Liquidity Line (SLL), introduced in 2020, was designed as a revolving liquidity backstop for countries with very strong economic fundamentals and institutional policy frameworks. It aims to address short-term, moderate balance of payments needs arising from capital flow volatility, helping to prevent emerging liquidity pressures from escalating into broader macroeconomic or financial instability. However, uptake has been limited, with only one arrangement for Chile in 2022, which was canceled shortly thereafter in favor of a Flexible Credit Line (FCL).