As the turmoil in the banking system claims more scalps, central banks across the globe announced a coordinated action, underlining the gravity of the problem at hand.
The Federal Reserve, the U.S. central bank, the Bank of Canada, the Bank of England, the European Central Bank, and the Swiss National Bank announced Sunday their decision to enhance the provision of liquidity through the standing U.S. dollar liquidity swap line arrangements.
The swap lines are a set of available standing facilities and would serve as backstops for easing strains in the global funding markets and mitigating the effects of such strains on the supply of credit to households and businesses.
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“To improve the swap lines’ effectiveness in providing U.S. dollar funding, the central banks currently offering U.S. dollar operations have agreed to increase the frequency of 7-day maturity operations from weekly to daily,” the central banks said in a joint statement.
These daily operations will commence on Monday and will continue at least through the end of April, they said.
The development comes close on the heels of the SNB brokering a deal with Swiss investment bank UBS Group AG (NYSE: UBS) to buy ailing domestic peer Credit Suisse AG (NYSE:CS) for $3.2 billion.
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