Central Banks Pump $620 B

123jump.com Staff
29 Sep, 2008
New York City

The Fed in conjunction with eight other central banks in Europe and Asia pumped more liquidity in the market. The revised action will make available $620 billion in dollar liquidity in Europe and will also carry more short term lending auctions.

[R]12:00PM New York – The central banks around the world work to increase liquidity, stocks markets fall sharply in Asia and Europe.[/R]

Central bankers around the world carried out a coordinated action to provide more dollar liquidity after UK nationalized risky mortgage lender and Benelux governments offered $17 billion bailout to Fortis.

Stock markets around the world remain nervous and fell sharply in Asia, Europe and in New York trading.

The Fed will increased its short term lending auction to $75 billion from $25 billion and will carry out two auctions for $150 billion in November and increase its dollar swap facilities with eight international central banks to $620 billion from $290 billion. The central banks of Canada, Australia, UK, Japan, Denmark, ECB, Norway and Switzerland will participate in this program.

The Fed has provided a largest increase in liquidity in the last one year and continues to indicate that it is willing to lend more if need be. Congress is scheduled for a vote on today and tomorrow on $700 billion plan which most people are deeply skeptical and opposed to.

The Fed statement noted, “These steps are being undertaken to mitigate pressures evident in the term funding markets both in the United States and abroad. By committing to provide a very large quantity of term funding, the Federal Reserve actions should reassure financial market participants that financing will be available against good collateral, lessening concerns about funding and rollover risk.”

Banks and brokerages around the world have declared losses of more than $530 billion since the credit market crisis started eighteen months ago. The data tracked by 123jump.com show that more than $500 billion losses may be taken in the next two years if housing market continue to deteriorate and economy weakens.