(Bloomberg) -- Federal Reserve Chair Jerome Powell said financial markets have been functioning despite the geopolitical turmoil, noting the abundance of liquidity in the system. 

“Between our swap lines and our repo facility with other foreign central banks and our standing repo facility in the Treasury market, we have institutionalized liquidity provision,” Powell said during his semi-annual testimony before the House Financial Services Committee. “Just the knowledge that that is there will help support good market function, which despite all this market volatility, we still have.”

The comments follow debate on that topic among funding mavens. Credit Suisse AG analyst Zoltan Pozsar in the past week said sanctions could prompt monetary authorities to supply the market with dollars. JPMorgan Chase & Co., Goldman Sachs and Barclays Plc pushed back, citing existing Fed policy tools.

That’s not to say the global funding markets have been completely calm. After Western nations imposed sanctions on Russia’s banking system, the cost of converting both euro and yen payments into dollars using what are known as three-month cross-currency basis swaps reached the widest levels since March 2020. The gap between future Libor and Federal Reserve rates, a key gauge of funding stress known as the FRA/OIS spread, also widened for one-month contracts by the most since March 2020.

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