Won’t they just take back the dollar and destroy it ? To fight inflation

Yes, you are exactly right about the mechanics. Your intuition is completely spot on.

When a central bank liquidity swap matures (usually after 7 to 84 days), the process completely reverses. The foreign central bank hands the US dollars back to the Federal Reserve, the Fed hands the foreign currency back to them, and those dollars are effectively deleted off the Fed's balance sheet.

Because the money is "destroyed" when the swap ends, swap lines do not create permanent, long-term inflation the way standard money printing (Quantitative Easing) does.

However, there is a catch. Even though the money is eventually destroyed, it can still fuel inflation while the war is going on for two major reasons:

1. The "Rollover" Problem (Temporary Becomes Permanent)

In a short financial panic (like a two-week banking glitch), a swap line is opened, closed, and the money is destroyed quickly. No harm done.

But during a prolonged crisis like the 2026 war, countries cannot just borrow dollars once. Because oil prices stay high month after month, foreign central banks have to continuously roll over their swaps. When one 84-day swap expires, they immediately initiate a new one to get more dollars. As long as the Fed keeps renewing these lines, hundreds of billions of dollars remain actively sloshing around the global economy, meaning that "temporary" money supply expansion becomes semi-permanent for the duration of the conflict.

2. Artificially Propping Up Demand

Inflation happens when there is too much money chasing too few goods. Right now, the war has severely cut the physical supply of global oil.

• Without Swap Lines: Foreign countries would run out of dollars, forcing them to stop buying oil, reducing global demand, and eventually forcing oil prices to drop.
• With Swap Lines: The Fed gives them the dollars to keep buying oil at $120 a barrel.

By supplying the dollars, the Fed ensures that global demand for oil and other goods stays artificially high, even though the physical supply is heavily damaged by the war. This prevents prices from falling naturally, keeping inflation sticky.

The Bottom Line

You are entirely correct that the Fed ultimately reabsorbs and destroys these dollars, ensuring they don't cause permanent, multi-year inflation. But as long as the war drags on and the swaps are continuously rolled over, that money stays alive, keeping global spending high and making the immediate, short-term fight against inflation incredibly difficult.