Fed, other central banks in joint effort to ease credit squeeze

0 Comments | AFP, December, 2007

WASHINGTON (AFP) — The Federal Reserve and four other central banks announced a joint initiative Wednesday to ease a global credit squeeze by pumping money into the global banking system with a new system of loan auctions.

The joint effort with the Bank of Canada, Bank of England, European Central Bank and the Swiss National Bank is "designed to address elevated pressures in short-term funding markets," the US central bank said in a statement.

The Fed also announced plans for a swap of credit lines with the ECB and Swiss central bank to help provide dollars to the banking system.

The move comes amid concerns about a widening credit crunch in which commercial banks are curbing lending even to other banks, raising concerns of a retrenchment that will crimp...