A s the U.S., Britain, and other countries prepare to inject capital into ailing banks , central banks are pouring in as many dollars as needed to free up markets. In a joint statement , the Federal Reserve, the European Central Bank, the Bank of England, the Bank of Japan, and the Swiss National Bank said they would expand current currency-swap arrangements to "accommodate whatever quantity of U.S. dollar funding is demanded." The central banks will supply dollars for 7-day, 28-day, and 84-day maturities at fixed interest rates. "Central banks will continue to work together and are prepared to take whatever measures are necessary to provide sufficient liquidity in short-term funding markets," the banks said. Short-term credit markets have been frozen as banks hoard dollars, bracing for losses on investments and hits from defaulting counterparties. Because of the Columbus Day holiday, there was no dollar Libor setting in London today. The three-month dollar Libor, or London Interbank Offered Rate, climbed last week to 4.82 percent. (The U.S. bond market is closed today, while the stock market is open.) Still, other money-market rates in Europe fell. The move by the central banks, on top of the planned bank recapitalizations, fueled rallies on Asian and European stock markets. Both London and Frankfurt surged more than 5 percent. The Japanese market was closed for a holiday. "By providing unlimited dollar funds, they are acting o ...
Anytime
