World's central banks inject US$180 bln of cash to save system

World's central banks inject US$180 bln of cash to save system

The US Federal Reserve, the European Central Bank, the Bank of Japan, the Bank of Canada, the Bank of England and the Swiss National Bank have launched a coordinated action to inject a combined US$427 billion US$180 billion of cash into money markets to unfreeze a frozen system of global inter-bank lending. The unprecedented action by the world's most powerful central banks reinforces the scale of the financial crisis engulfing global markets and is aimed at calming what can only be described as panic on bank trading desks. Here is the full statement below from the US Federal Reserve.

Today, the Bank of Canada, the Bank of England, the European Central Bank (ECB), the Federal Reserve, the Bank of Japan, and the Swiss National Bank are announcing coordinated measures designed to address the continued elevated pressures in U.S. dollar short-term funding markets. These measures, together with other actions taken in the last few days by individual central banks, are designed to improve the liquidity conditions in global financial markets. The central banks continue to work together closely and will take appropriate steps to address the ongoing pressures. The Federal Open Market Committee has authorized a $180 billion expansion of its temporary reciprocal currency arrangements (swap lines). This increased capacity will be available to provide dollar funding for both term and overnight liquidity operations by the other central banks.  The FOMC has authorized increases in the existing swap lines with the ECB and the Swiss National Bank. These larger facilities will now support the provision of U.S. dollar liquidity in amounts of up to $110 billion by the ECB, an increase of $55 billion, and up to $27 billion by the Swiss National Bank, an increase of $15 billion.  In addition, new swap facilities have been authorized with the Bank of Japan, the Bank of England, and the Bank of Canada. These facilities will support the provision of U.S. dollar liquidity in amounts of up to $60 billion by the Bank of Japan, $40 billion by the Bank of England, and $10 billion by the Bank of Canada.   All of these reciprocal currency arrangements have been authorized through January 30, 2009.  

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