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    Fed joins with European banks to battle credit crisis

    02.05.2008 - 15:52 | Son Güncelleme:

    The Federal Reserve announced Friday that it will expand a series of efforts to deal with the global credit crisis, in coordination with European central banks.

    The Fed said it was boosting the amount of emergency reserves it supplies to U.S. banks to $150 billion in May, from the $100 billion it supplied in April.

    The Fed took this action and several other moves to boost credit in coordination with the European Central Bank and the Swiss National Bank.

    The latest moves are part of a series of actions the Fed has made since the credit crisis struck in August.

    The efforts are designed to increase reserves so that banks don't become hesitant about lending to consumers and businesses, which would make the current economic slowdown even more severe.

    The Fed's decision to boost the amount of loans it makes to banks every two weeks, in a process known as a Term Auction Facility, was aimed at sending a strong signal that the central bank is prepared to supply as much in reserves as U.S. banks need. The latest move was made in coordination with the European central banks' efforts to bolster their financial systems as well.

    The Fed said it was also expanding the types of assets that investment banks can use as collateral to receive loans from the central bank. In March, the Fed used powers it obtained during the Great Depression to begin making loans to investment banks. Previously, the Fed only made direct lends to commercial banks.

    Photo: AP

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