Central banks open taps to tackle market squeeze

Business Materials 19 September 2008 03:10 (UTC +04:00)

The world's top central banks joined forces on Thursday to throw a multibillion-dollar lifeline to global markets in a dramatic effort to free up bank-to-bank lending frozen by upheavals on Wall Street.

In an unprecedented move, the U.S. Federal Reserve made an extra $180 billion (99 billion pounds) available to other major central banks to lend to their local commercial banks in a bid to get U.S. dollars circulating in overnight and short-term money markets, the Reuters reported.

The latest move brought to $247 billion the total amount of dollars the Fed was providing to other central banks.

In addition, the U.S. central bank pumped an extra $105 billion dollars into the U.S. market, a record amount that built on already large operations earlier this week.

Other central banks, including the Bank of England and the European Central Bank, also lent out extra funds in their own currencies as markets reeled in the wake of a round of takeovers and mergers among top financial firms and renewed concerns about how the U.S. economy will weather the storm.

Investment bank Lehman Brothers filed for bankruptcy on Monday, roiling markets, and the Fed announced an $85 billion bailout of insurer American International Group on Tuesday, worried a failure could wreak untold havoc worldwide.

U.S. President George W. Bush sought to calm unsettled nerves on Thursday, saying authorities would take further actions if needed.

"The American people can be sure we will continue to act to strengthen and stabilize our financial markets and improve investor confidence," Bush said.