Central banks reveal co-ordinated response to liquidity crisis
The world's major central banks today unveiled plans for a $180 billion injection of liquidity to restore stability to global financial markets.
Plunging market confidence in the wake of the bankruptcy of Lehman Brothers and the rescue of insurance firm American International Group has exacerbated severe liquidity shortages in recent days.
Today, the Federal Reserve Bank of New York, the European Central Bank (ECB), the Bank of England, and the central banks of Canada, Japan and Switzerland announced co-ordinated measures to improve liquidity conditions.
The Federal Open Market Committee authorised a $180 billion expansion of the Federal Reserve's swap lines, intended to help the provide dollar funding for both short-term and overnight liquidity operations by the other central banks.
These larger reciprocal currency arrangements could double the ECB's ability to provide dollar liquidity, from $55 billion to $110 billion, while raising the Swiss National Bank's ability by $15 billion to a possible $27 billion. Additionally, new swap facilities authorised with the Bank of Japan, Bank of England and Bank of Canada could see the provision of dollar liquidity in amounts of up to $60 billion, $40 billion and $10 billion, respectively.
All of these currency arrangements have been authorised until January 30, 2009.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
More on Regulation
Revealed: the three EU banks applying for IMA approval
BNP Paribas, Deutsche Bank and Intesa Sanpaolo ask ECB to use internal models for FRTB
FCA presses UK non-banks to put their affairs in order
Greater scrutiny of wind-down plans by regulator could alter capital and liquidity requirements
Industry calls for major rethink of Basel III rules
Isda AGM: Divergence on implementation suggests rules could be flawed, bankers say
Saudi Arabia poised to become clean netting jurisdiction
Isda AGM: Netting regulation awaiting final approvals from regulators
Japanese megabanks shun internal models as FRTB bites
Isda AGM: All in-scope banks opt for standardised approach to market risk; Nomura eyes IMA in 2025
CFTC chair backs easing of G-Sib surcharge in Basel endgame
Isda AGM: Fed’s proposed surcharge changes could hike client clearing cost by 80%
UK investment firms feeling the heat on prudential rules
Signs firms are falling behind FCA’s expectations on wind-down and liquidity risk management
The American way: a stress-test substitute for Basel’s IRRBB?
Bankers divided over new CCAR scenario designed to bridge supervisory gap exposed by SVB failure