Central banks co-ordinated action will help households borrow money
Wednesday, 30 November 2011 02:15
In a sign that the world economy is potentially heading for a global recession, leaders of central banks in some of the world’s biggest economies have announced co-ordinated action to support the global economy.
The central banks of Switzerland, Canada and Japan have joined with the US Federal Reserve, the European Central Bank and the Bank of England to create methods to help businesses and consumers get access to financial credit easier.
The scheme will commence on Monday 5th December and will aim to ensure that commercial banks can access funds when they need to as well as making it cheaper for them to purchase US dollars.
A statement from the Bank of England said: “These central banks have agreed to lower the pricing on the existing temporary U.S. dollar liquidity swap arrangements by 50 basis points so that the new rate will be the U.S. dollar overnight index swap (OIS) rate plus 50 basis points. This pricing will be applied to all operations conducted from 5 December 2011. The authorization of these swap arrangements has been extended to 1 February 2013.”
The move will offer better liquidity in the financial system and there were immediate moves upwards in stock markets around the globe after the FTSE 100 had fallen earlier in the day as a result of Standard & Poor’s downgrading of 15 major lenders.
On the news from the central banks both the euro and the pound strengthened against the dollar.
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