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Big central banks widen swap deals in crisis
Source: Agencies |
December 14, 2012, Friday
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Print Edition
Print Edition
MAJOR central banks acted yesterday to try to shore up confidence in the global financial system by extending a program that makes it easier for banks to borrow US dollars.
The move renews for a year a measure that was unveiled in November 2011 in response to Europe's debt crisis. It had been set to expire in February.
The program lets central banks swap their currencies at the US Federal Reserve in exchange for dollars. Commercial banks can then borrow dollars, the dominant currency of trade, at low rates. Central banks pay the Fed interest on the dollars they lend to commercial banks.
The measure is intended to help stabilize a global financial system straining from Europe's financial crisis and slowing growth worldwide. The alliance of 17 European countries that use the euro is in recession.
The central banks issued news releases simultaneously yesterday in a coordinated signal to investors and lenders that they will continue to try to ease global financial strains.
Taking part in the move, besides the Fed, were the European Central Bank, the Bank of England, the Swiss National Bank and the Bank of Canada. The Bank of Japan is to consider the measure at its next meeting. The ECB also said it would continue its operations to lend dollars to banks for one week and three months.
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