The US Federal Reserve has set up $US30 billion ($36 billion) worth of new currency swaps with central banks in Australia and Scandinavia, marking its latest bid to ease global credit market strains.
"These facilities, like those already in place with other central banks, are designed to improve liquidity conditions in global financial markets,'' the Fed said late yesterday in Washington.
"Central banks continue to work together during this period of market stress and are prepared to take further steps as the need arises.''
The action comes on top of $US247 billion that has already been committed to currency swaps with other major central banks, as authorities battle a global credit crunch sparked by the collapse of the US subprime mortgage market last year.
The Fed said it had established temporary reciprocal currency swap lines of up to $US10 billion each with the Reserve Bank of Australia and Sweden's Riksbank, and $US5 billion swaps with Denmark's Nationalbank and Norway's Norges Bank.
It said the swaps were specifically aimed at elevated pressures in US dollar short-term funding markets.
"These facilities, like those already in place with other central banks, are designed to improve liquidity conditions in global financial markets,'' the RBA said today in a statement released simultaneously with a similar notice from the Fed.
"Central banks continue to work together during this period of market stress and are prepared to take further steps as the need arises.''
The Fed has already set up a $US110 billion swap line with the European Central Bank, $US60 billion with the Bank of Japan, $US40 billion with the Bank of England, $US27 billion with the Swiss National Bank, and $US10 billion with the Bank of Canada.
The swaps have been authorised until January 20, 2009, the Fed said.
Reuters
