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    Central banks in Europe announce unlimited dollar financing

    AFP
    13.10.2008 - 10:54 | Son Güncelleme:

    Central banks in Europe announced on Monday that they would provide unlimited amounts of dollar loans over periods ranging from one week to 84 days.

    The Bank of England, European Central Bank and Swiss National Bank will make U.S. dollar loans for periods of seven, 28 and 84 days "at fixed interest rates for full allotment," an ECB statement said.

     

    "The Bank of Japan will be considering the introduction of similar measures," it added.

     

    The decision was part of a fresh push by the central banks in Europe along with the U.S. Federal Reserve and Bank of Japan to boost the supply of dollars in stressed credit markets.

     

    By providing unlimited amounts of dollars to commercial banks, referred to as counterparties, the banks aimed "to improve liquidity in short-term U.S. dollar funding markets," the statement said.

     

    "Counterparties in these operations will be able to borrow any amount they wish against the appropriate collateral in each jurisdiction," the central banks said.

     

    They added that they "will continue to work together and are prepared to take whatever measures are necessary to provide sufficient liquidity in short-term funding markets."

     

    Last week, central banks in Europe and North America unveiled an exceptional interest rate cut, to which the Chinese National Bank added a cut of its own, and along with the Bank of Japan, they have been providing huge amounts of cash to stressed interbank markets.

     

    Those markets froze when the international financial crisis made banks wary of lending to each other because they were not sure that borrowers would be able to pay back the loans.

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