Treasury Secretary Scott Besant testifies during a Senate Appropriations Subcommittee on Financial Services and General Government hearing on the Treasury Department’s 2027 budget request on April 22, 2026, in Washington, DC.
Nathan Posner | Anadolu | getty images
Treasury Secretary Scott Besant on Friday defended the possibility of the US participating in a currency swap with allies in the Persian Gulf and Asia who are seeking financial assistance because of the Iran war.
Discussions with those countries about US dollar swap lines are “part of an ongoing, regular conversation that @USTreasury has been having with our partners for several years,” Besant said in an X post.
“They are a testament to the primacy of the US dollar and the strength of America’s economic shield,” he said of the potential swaps.
The claims of benefits and equity of the swap lines come as the Trump administration is considering offering the United Arab Emirates a financial lifeline, CNBC reported on Tuesday.
Just two days earlier, Besant had said that “many” allies in the Persian Gulf were seeking the same support, as the ongoing war wreaked havoc on the economies of the oil-rich countries.
Swap lines involve the central banks of two countries agreeing to exchange equivalent quantities of each other’s currency, while agreeing to swap those quantities back at a specified future date. To “enhance the provision of US dollar liquidity”, the US maintains “standing US dollar liquidity swap line arrangements” with the central banks of Canada, England, Japan and Switzerland, as well as the European Central Bank, according to the . federal Reserve.
The tool dates back to the 1960s and has been used to stabilize the Mexican economy in the 1980s, after the Sept. 11 terrorist attacks, during the 2008 financial crisis and at the beginning of the COVID-19 pandemic, according to one. Yale School of Management report.
The maneuver aims to ease pressure on global funding markets, providing relief to households and businesses in both participating countries.
The Treasury may provide its own version of swaps using its Exchange Stabilization Fund, although traditional swaps are often offered by the Federal Reserve.
The arrangement could pose a political risk to President Donald Trump, whose approval ratings on the economy have fallen as war-induced supply shocks sharply raise the prices of gasoline and other products, exacerbating Americans’ existing inflation problem. A CNBC All-America poll released Thursday found that 60% of respondents disagree with how Trump is handling the economy.
A potential swap line risks being seen as an unnecessary bailout of a foreign country – especially if it is a wealthy country like the United Arab Emirates, which has one of the world’s highest per capita incomes.
Trump, asked about a possible UAE swap line on CNBC’s “Squawk Box” on Tuesday, said he was in favor of it.
“If they had a problem… I would be there for them,” Trump said.
In Friday’s X post, Besant gave a full defense of the additional swap lines.
He argued, “They could benefit our country by strengthening dollar use and liquidity internationally, maintaining smooth functioning in dollar funding markets, promoting trade and investment with the United States, and, in hypothetical stress scenarios, preventing disorderly sell-offs of U.S. assets as well as disruption to American markets, businesses, and households.”
“Many of these countries have pristine sovereign balance sheets and large dollar holdings – larger than many of the major economies with which we maintain standing swap facilities,” he wrote. Besant did not name any countries in the post and she and Trump had only mentioned the UAE earlier this week.
“I commend the foresight and cautious risk management of our partners by exploring additional financial buffers during periods of market downturn. The extension of permanent swap lines could be a great first step in creating new US dollar funding hubs in the Gulf and Asia.”
“Consistent long-term initiatives, including countering the growth of problematic, alternative payments systems, strengthen the dollar’s dominance and reserve currency status,” he said. “Under @POTUS, this is American economic leadership at work.”
— cnbc Eamon Javers Contributed to this report.