Jul 30, 2008
The Fed, the ECB and the SNB strengthen their concerted action
The Federal Reserve USA, the European Central Bank and the Swiss National Bank announced a strengthening of their concerted effort to offer credit facilities to banks.
As part of measures to try to eliminate the credit crunch by increasing liquidity in the interbank money market and the Fed said that investment banks could go until 30 January 2009 at his desk refinancing d ' urgency usually reserved for commercial banks (Primary Dealer Credit Facility).
This exceptional credit facility had been set up in March for six months in the wake of the collapse of the bank Bear Stearns.
The Fed, in a statement, said it extended the measure "in light of the circumstances which continue fragile financial markets."
She added that she withdrew the measure when conditions in financial markets will no longer be "unusual and urgent".
The auctions conducted for large banks under the new credit facility of the Fed (Term Securities Lending Facility) will also be extended until 30 January 2009.
For commercial banks, under the swap line between the Fed and the ECB, which allows the ECB to refinance their dollar European banks, both central banks will put in place bids to 84 days in addition to the dollar in auction existing 28 days (Term Auction Facility).
The program was introduced last December to try to reduce tensions in the banking system caused by the tightening of credit since the summer of 2007.
The SNB has indicated that it was joining this concerted action to 84 days.
The European Central Bank said that the program would begin 84 days with effect from August 8. The auction conducted all the TAF two weeks will alternate credit facilities to 84 days for an amount of 10 billion dollars and facilities for 28 days for an amount of 20 billion dollars.
This means that following a period of transition, there will be ongoing three operations to 84 days and an operation to 28 days for an unchanged line of the swap of 50 billion dollars, said the ECB.
During the transitional phase in August and September, the ECB will reduce the amount of transactions to 28 days while introducing those 84 days. During the first operation of this transitional period, the overall volume of the swap line will be temporarily increased to 55 billion dollars.
by erectusplus at 8:53 AM |
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