(MENAFN) In response to the banking crises sweeping the US and Europe, six central banks, including the US Federal Reserve, have taken action to support the liquidity of the American dollar. The other five central banks involved in the coordinated action are the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, and the Swiss National Bank. The central banks have stated that their coordinated action is aimed at "enhancing the provision of liquidity via the standing U.S. dollar liquidity swap line arrangements."
To improve the effectiveness of the swap lines in providing US dollar funding, the central banks have agreed to increase the frequency of 7-day maturity operations from weekly to daily. The daily operations will begin on Monday and continue at least through the end of April. The central banks have emphasized that the network of swap lines among these central banks serves as an important liquidity backstop to ease strains in global funding markets, thereby helping to mitigate the effects of such strains on the supply of credit to households and businesses.
The announcement of the coordinated action by the six central banks comes as four US banks have demised in recent weeks and Credit Suisse, a Swiss multinational investment bank and financial services company, faces financial troubles. In response to the situation, UBS announced late Sunday that it will buy Credit Suisse for 3 billion Swiss francs (USD 3.2 billion), while the Swiss government has guaranteed to assume losses up to 9 billion francs from assets.
The coordinated action by the six central banks is aimed at supporting the liquidity of the American dollar amid the current banking crises in the US and Europe. The central banks have stated that their coordinated action is aimed at enhancing the provision of liquidity via the standing U.S. dollar liquidity swap line arrangements. The central banks have also emphasized that the network of swap lines among these central banks serves as an important liquidity backstop to ease strains in global funding markets, thereby helping to mitigate the effects of such strains on the supply of credit to households and businesses.
The announcement of the coordinated action by the six central banks comes at a time when four US banks have collapsed in recent weeks, and Credit Suisse, one of the largest financial services providers in the world, faces financial troubles. In response to the situation, UBS has announced its plan to buy Credit Suisse for 3 billion Swiss francs. The Swiss government has also guaranteed to assume losses up to 9 billion francs from assets. The coordinated action by the six central banks is aimed at supporting the liquidity of the American dollar and providing a liquidity backstop to ease strains in global funding markets.
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