Federal Reserve Unites with Five Central Banks

The Federal Reserve Board announced on Thursday a plan to inject $180 billion into the global economy in an effort to ease the pain of the credit crisis and calm the fears of nervous investors. The Fed is working in a united effort with five central banks: the Swiss National Bank, the European Central Bank, the Bank of Canada, the Bank of Japan, and the Bank of England.

The central banks said in a statement, "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 will continue to work together closely and will take appropriate steps to address the ongoing pressures."

The Federal Open Market Committee authorized the expansion of its temporary reciprocal currency arrangements, or swap lines. This measure includes an increase in the existing swap lines with the European Central Bank and the Swiss National Bank, and the establishment of new swap line facilities with the Bank of Canada, the Bank of England, and the Bank of Japan.

The Swiss National Bank's swap line has been raised to $27 billion, for an increase of $15 billion. The European Central Bank's swap line has been raised to $110 billion, doubled from its previous $55 billion. New swap line arrangements are in the amounts of $10 billion for the Bank of Canada, $60 billion for the Bank Of Japan, and $40 billion for the Bank of England.

The Bank of England, the Bank of Japan, the European Central Bank, and the Swiss National Bank have all implemented an immediate plan to promote the liquidity of U.S. dollars.

The Bank of Canada said in a statement, "The Bank judges that it is not necessary for it to draw on this swap facility at this time, but that it is prudent to have the agreement in place. Should the swap be drawn on, the details of the liquidity facilities provided would depend on the specific market circumstances at the time. The Bank of Canada continues to closely monitor global market developments and remains committed to providing liquidity as required to support the stability of the Canadian financial system and the functioning of financial markets."


Sources:
The Federal Reserve
European Central Bank
Swiss National Bank
Bank of England
Bank of Japan
Bank of Canada