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(CEP News) - In an effort to free up lending among economic agents, the Bank of Japan pumped ¥3 trillion (US$28.82 billion) into the financial system through overnight open market operations.
The injections came in two tranches, the first worth ¥2 trillion followed by a second ¥1 trillion injection. The move marks the third time the BOJ has taken similar action since the collapse of Lehman Brothers in the United States, and the renewed bout of financial market turbulence. With financial institutions refusing to lend among one another, central banks have ramped up their liquidity injections to the financial system to induce lending. On Monday, the failure to pass a fiscal rescue package in the United States sparked a massive selloff in stocks and Tuesday's overnight USD LIBOR to jump 431 basis points to 6.88%. Meanwhile, the overnight Yen LIBOR rate stands at 1.03125%, over double the BOJ's 0.50% target. By Erik Kevin Franco,
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