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ECB, BoE, SNB step up money market efforts

The European Central Bank, Bank of England and Swiss National Bank stepped up their money market efforts, with a new plan to pump in one-week dollar funds.

The moves add to the overnight funds the trio are already pouring into markets as part of a joint offensive with the US Federal Reserve to try and unjam and restore confidence in interbank lending markets.

The ECB said it would provide $35 billion of the new one-week funds via a variable rate auction over the quarter end. At the same time it will scale back its overnight dollar funding to $30 billion from $40 billion during this week.

The BoE said it would lend $30 billion of one-week funds and also pump in as much as Ł40 billion ($73.53 billion) on Monday, the latter to address its own particular money market strain.

The SNB said it would inject $9 billion as part of the new one-week plan.

“These operations are designed to address funding pressures over quarter end. Central banks continue to work together closely and are prepared to take further steps as needed to address the ongoing pressures in funding markets,” a statement from the Fed said.

Central banks have been employing extraordinary coordinated measures in the last week designed to address the pressures in global money markets which have flared up following the collapse of Lehman Brothers, the sale of Merrill Lynch and an emergency $85 billion prop up of insurer AIG by the US. (Reuters)