Central banks announce new liquidity measures to ease banking crisis

The Federal Reserve and other global central banks have announced new measures to improve US dollar liquidity as global financial markets reel from the turmoil affecting the banking sector.

In a joint statement released on Sunday, the world’s leading central banks said they will launch daily operations to make funding available through standing swap lines. Previously, these operations were performed on a weekly basis.

The Fed, the European Central Bank, the Bank of England and the Swiss National Bank are among those involved in what was described as a “coordinated 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 acts as an important liquidity backstop to ease the strain on global financial 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 biggest banks, UBS and Credit Suisse, would merge following a hectic weekend of talks brokered by Swiss regulators to protect its banking system and try to prevent a crisis from spreading across global financial markets.

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