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 in the banking sector.
In a joint statement released on Sunday, the world’s major central banks said they would launch daily operations to make funding available through permanent swap lines. Previously, these operations were carried out on a weekly basis.
The Fed, European Central Bank, Bank of England and Swiss National Bank are among those involved in what has been described as “coordinated action”. They were joined by the Bank of Canada and the Bank of Japan.
“The network of swap lines between these central banks is a set of standing facilities available and serves as an important backstop to ease stresses in global funding markets, helping to mitigate the effects of such stresses 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 after a frenetic weekend of negotiations brokered by Swiss regulators to protect its banking system and try to prevent a crisis from spreading to global financial markets.