The Federal Reserve and other global central banks have announced fresh measures to improve US dollar liquidity as global financial markets reel from the turmoil hitting the banking sector.
In a joint statement released on Sunday, the world’s leading central banks said that they will launch daily operations to make funding available via standing swap lines. Previously, those operations were conducted on a weekly basis.
The Fed, European Central Bank, the Bank of England and the Swiss National Bank are among those involved in what was described as a “co-ordinated action”. They were joined by the Bank of Canada and the Bank of Japan.
“The network of swap lines among these central banks is a set of available standing facilities and serve as an important liquidity backstop to ease strains in global funding markets, thereby helping to mitigate the effects of such strains on the supply of credit to households and businesses,” the central banks said in a statement.
The move came hours after the SNB announced that its two largest banks, UBS and Credit Suisse, would merge after a frantic weekend of negotiations brokered by Swiss regulators to safeguard its banking system and attempt to prevent a crisis spreading across global financial markets.