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(CEP News) Frankfurt - On Thursday, the European Central Bank, the Bank of England, the Federal Reserve, the Bank of Japan and the Swiss National Bank announced coordinated actions to be taken to ease elevated tension in the short-term U.S. money markets.
"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," an ECB press release said. "The central banks continue to work together closely and will take appropriate steps to address the ongoing pressures." The press release also noted that the ECB, along the Federal Reserve, will inject $25 billion through 28-day maturity operations and $15 billion through 84-day maturity operations. "Overall, the dollar funding operations conducted by the Eurosystem could reach an outstanding amount of $110 billion, compared to the current $50 billion," the press release concluded. The Bank of Japan announced that it had reached an agreement with the Federal Reserve to supply up to $60 billion to investors in Japan, according to a stament published on the central bank's website on Thursday. The U.S. dollar swap agreement will done "appropriately in view of the prevailing market conditions," the published statement said. The Bank of England has also entered into a U.S. dollar swap agreement with the Fed and has announced that it will lend out U.S. dollar funds in the form of an auction, in exchange for elibible collateral. "The amount offered in each repo operation will initially be $40bn," the BOE said in a statement posted on its website. "This amount will be reviewed on a regular basis, in consultation with the other central banks." The currency arrangement between the Fed and the Bank of Canada totals $10 billion and would be used if needed to increase U.S. dollar liquidity in Canada. "If drawn on by the Bank of Canada, the swap would provide liquidity facilities for use by financial institutions in Canada that are similar in nature to those being announced today by the other central banks," the Canadian central bank said in a statement. "This swap facility expires on 30 January 2009." By Todd Wailoo,
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