US and European central banks fire new round at crisis

Recycling

The US, European, and Swiss central banks Wednesday extended emergency lending facilities for investment banks and expanded other liquidity programs to ease credit market strains that have weighed on the global economy for nearly a year.

The US Federal Reserve said it was prolonging the emergency credit facility for primary dealers to January 30 which had been due to expire in mid-September. The Primary Dealer Credit Facility was launched in March after the near bankruptcy of Bear Stearns and it marked the first time since the Great Depression that the Fed had opened its emergency lending to investment banks. The Fed also said it would offer longer-term loans to banks under its Term Auction Facility, introducing 84-day offerings in addition to its current 28-day loans. The TAF was established in December to try to tamp down funding pressures.

The Federal Reverse plans alternate auctions of $75 billion in 28-day credit, with offerings of $25 billion in 84-day funds every two weeks. Credit outstanding at the Term Auction Facility would total no more than $150 billion, as is currently the case.

In parallel, the European Central Bank and Swiss National Bank said they would begin conducting US dollar auctions with 84-day terms, in addition to their current 28-day offerings, alternating on a bi-weekly basis. Auction maximums would be $2 billion for the SNB and $10 billion for the ECB.

The Fed said it would temporarily expand its dollar swap line with the ECB to $55 billion from $50 billion. The Fed had put in place swap lines with both the ECB and SNB so that those central banks could provide dollars to European markets. (Reuters)

ADVERTISEMENT

Technical Recession Ends, KSH Confirms Analysis

Technical Recession Ends, KSH Confirms

India's G20 Presidency, Dawn of New Multilateralism - Narend... World

India's G20 Presidency, Dawn of New Multilateralism - Narend...

Production Resumes at Ganz's Szolnok Plant Manufacturing

Production Resumes at Ganz's Szolnok Plant

TikTok Commits to Improved Consumer Communication in Hungary Social

TikTok Commits to Improved Consumer Communication in Hungary

SUPPORT THE BUDAPEST BUSINESS JOURNAL

Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.