In banking turmoil, major central banks are stepping in. The Bank of England, the European Central Bank (ECB), the US Federal Reserve (Fed), the Bank of Japan, the Swiss National Bank and the Central Bank of Canada last night announced measures to boost the liquidity supply via the current US dollar. Bank swap agreement.
These are permanent lines of credit by which central banks provide each other with their own currencies in exchange that is fast, non-bureaucratic, and without additional fees. Routinely done weekly, these comparisons now have to be done daily.
Another measure to avoid panic
Apparently, despite the agreement to sell Credit Suisse, there are still acute fears of a major turmoil in the financial markets. Similar coordinated dollar lending programs by central banks last existed at the start of the coronavirus pandemic and the sudden turmoil in the global economy. Prior to this, similar interventions had been performed several times during the financial crisis from 2008 onwards.
A few hours before the evening’s most important western central banks announced, the government in Bern closed the takeover of hard-hit Swiss bank Credit Suisse by longtime Swiss rival UBS.
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