BWC Advisory Council Member Mark Sobel recently wrote for OMFIF examining the buzz around a possible currency swap between the U.S. and the UAE, and why it’s likely more of a political decision than a financial one. Sobel argues that while the UAE might technically qualify for various swap arrangements, it neither needs nor is seeking liquidity support; rather, it wants a political signal of U.S. backing amid regional tensions with Iran. He cautions that a Fed swap would be inappropriate given the current absence of systemic financial stress, and that an ESF swap would push the Treasury into politically fraught new territory with potentially messy consequences for other countries seeking similar arrangements.

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All views expressed by members are their own and not reflective of the views of the Bretton Woods Committee.