20.16.3. The severity of the US dollar shortage during the global financial crisis (GFC) led to an international policy response. European central banks adopted measures to alleviate banks’ funding pressures in their domestic currencies, but by itself this did not provide sufficient US dollar liquidity. As a remedy, the Federal Reserve introduced a system of reciprocal currency arrangements called "swap lines" with other central banks. As McGuire explains, "In providing US dollars on a global scale, the Federal Reserve effectively engaged in international lending of last resort. The swap network can be understood as a mechanism by which the Federal Reserve extends loans, collateralized by foreign currencies, to other central banks, which in turn make these funds available through US dollar auctions in their respective jurisdictions.³³ This made US dollar liquidity accessible to commercial banks around the world, including those that have no US subsidiaries or insufficient eligible collateral to borrow directly from the Federal Reserve System."¹

Such lending of last resort (LOLR) might present two sorts of classic problems: One, is there enough money to reassure markets, or is the money limited? Two, what sort of moral hazard is created? A successful swap program overcomes these problems with specific benefits:

I. It has the power to create an unlimited amount of money
II. It does not create a new moral hazard(s)

According to McGuire, which of these benefits did the international response to the GFC (i.e., the Fed's swap lines) confer?