International - Coordinated Central Bank Action to Improve US$ Liquidity

bankofengland.co.uk ^ | The Bank of England

[HAL9000]

Today, the Bank of Canada, the Bank of England, the European Central Bank (ECB), the Federal Reserve, the Bank of Japan and the Swiss National Bank are announcing coordinated measures designed to address the continued elevated pressures in US dollar short-term funding markets. These measures, together with other actions taken in the last few days by individual central banks, are designed to improve the liquidity conditions in global financial markets. The central banks will continue to work together closely and will take appropriate steps to address the ongoing pressures.

Bank of England action

The Bank of England will offer to lend each day US dollar funds overnight against eligible collateral. The first such operation will take place today. The amount offered in each repo operation will initially be $40bn. This amount will be reviewed on a regular basis, in consultation with the other central banks.

The US dollar repo operations will take the form of an auction. Eligible collateral will consist of securities routinely eligible in the Bank’s short-term repo Open Market Operations together with conventional US Treasuries.

The Bank of England has concluded a reciprocal swap agreement (swap line) with the Federal Reserve. Through this arrangement the Federal Reserve will provide the Bank of England with US dollar funding to facilitate these operations.

For more information please see the Market Notice published by the Bank today.

Information on related action to be taken by other central banks

Information on the actions to be taken by other central banks is available on the following websites:

Bank of Canada (http://www.bankofcanada.ca/)
Bank of Japan (http://www.boj.or.jp/en/)
European Central Bank (http://www.ecb.int)
Federal Reserve System (http://www.federalreserve.gov)
Swiss National Bank (http://www.snb.ch/)

[cherry]

my guess is that this is good????

[Cementjungle]

my guess is that this is good????

Sounds like it to me.

[HAL9000]

I’m no economist, but I’m guessing it’s good news for the short term. I’m not so sure about long-term.

[BGHater]

Press Release

Release Date: September 18, 2008

For release at 3:00 a.m. EDT

Today, the Bank of Canada, the Bank of England, the European Central Bank (ECB), the Federal Reserve, the Bank of Japan, and the Swiss National Bank are announcing coordinated measures designed to address the continued elevated pressures in U.S. dollar short-term funding markets. These measures, together with other actions taken in the last few days by individual central banks, are designed to improve the liquidity conditions in global financial markets. The central banks continue to work together closely and will take appropriate steps to address the ongoing pressures.

Federal Reserve Actions
The Federal Open Market Committee has authorized a $180 billion expansion of its temporary reciprocal currency arrangements (swap lines). This increased capacity will be available to provide dollar funding for both term and overnight liquidity operations by the other central banks. 

The FOMC has authorized increases in the existing swap lines with the ECB and the Swiss National Bank. These larger facilities will now support the provision of U.S. dollar liquidity in amounts of up to $110 billion by the ECB, an increase of $55 billion, and up to $27 billion by the Swiss National Bank, an increase of $15 billion. 

In addition, new swap facilities have been authorized with the Bank of Japan, the Bank of England, and the Bank of Canada. These facilities will support the provision of U.S. dollar liquidity in amounts of up to $60 billion by the Bank of Japan, $40 billion by the Bank of England, and $10 billion by the Bank of Canada.  

All of these reciprocal currency arrangements have been authorized through January 30, 2009. 

Information on Related Actions Being Taken by Other Central Banks
Information on the actions that will be taken by other central banks is available at the following websites:

Bank of Canada 
Bank of England 
European Central Bank 
Bank of Japan 
Swiss National Bank 

http://www.federalreserve.gov/newsevents/press/monetary/20080918a.htm

[ThePythonicCow]

The dollar gets to live another day.

And gold is already down from its peak yesterday of $885 to $873.

When you owe the world a few hundred trillion dollars (or whatever it is), they are at your beck and call.

Power to the Debtor!

[sbelew]

Imagine yourself in a snowstorm. Now, imagine lighting a $100 bill for warmth.

Temporary, ineffective, and a waste of money.

[ThePythonicCow]

I think some of your links got confused by the "Leaving the Board" link and image. Let me try that part of your post again ...

Bank of Canada
Bank of England
European Central Bank
Bank of Japan
Swiss National Bank

[BGHater]

Ouch, I didn’t catch that. Thx.

[ThePythonicCow]

Temporary, ineffective, and a waste of money.

Nah - it will all make sense soon enough. Once we inflate our currency enough, then burning $100 bills for warmth will be a perfectly sensible thing to do. The pile of firewood you'll be able to get for $100 will provide less warmth than the bills themselves.

[BGHater]

Europe is up so far. Asia is responding as well, not green put surging from further in the red.

Symbol	Name	Last Trade	Change	Related Info
^ATX	ATX	2,923.39 3:45AM ET	15.81 (0.54%)	Components, Chart, More
^BFX	BEL-20	2,815.40 4:01AM ET	26.45 (0.95%)	Chart, More
^FCHI	CAC 40	4,027.53 3:46AM ET	27.42 (0.69%)	Chart, More
^GDAXI	DAX	5,883.35 3:45AM ET	22.37 (0.38%)	Chart, More
^AEX	AEX General	359.06 4:01AM ET	2.08 (0.58%)	Chart, More
^OSEAX	OSE All Share	383.27 3:45AM ET	3.26 (0.86%)	Components, Chart, More
^MIBTEL	MIBTel	20,030.00 4:01AM ET	24.00 (0.12%)	Components, Chart, More
^IXX	ISE National-100	73.72 Sep 17	0.00 (0.00%)	Chart, More
^SMSI	Madrid General	1,151.59 Sep 17	6.90 (0.60%)	Components, Chart, More
^OMXSPI	Stockholm General	248.80 4:00AM ET	0.18 (0.07%)	Chart, More
^SSMI	Swiss Market	6,700.63 4:01AM ET	46.30 (0.70%)	Chart, More
^FTSE	FTSE 100	4,961.80 3:45AM ET	49.40 (1.01%)	Components, Chart, More

[sbelew]

“The pile of firewood you’ll be able to get for $100 will provide less warmth than the bills themselves. “

Heh - I didn’t think of that angle.

Welcome to the United States of Zimberica.

[Chet 99]

The old joke... you owe the bank $1000, you’ve got a problem... you owe the bank $1,000,000, and the bank has the problem

[Uncle Ike]

” you owe the bank $1,000,000, and the bank has the problem “

And we’re just now finding out how *big* the banks’ ‘problem’ really is......

What happens when they figure out that there aren’t enough assets in the world to settle all of the outstanding debt??

[ThePythonicCow]

Wow - more free money. If you click through to the links, you see that the U.S.Treasury is providing the foreign banks billions of dollars, with which to "borrow" (like a pawn shop) securities for short terms. The amounts provided are:

Country	Dollars
Canada	$10 B
England	$40 B
Europe	$40 B
Japan	$60 B
Swiss	$10 B per day!

[NVDave]

Yes and no.

Yes, because it inject some liquidity into the US Fed on the short term.

No, because the co-ordination indicates the central bankers are starting to grasp at straws - especially the Fed. The Fed perceiving a need for this type of co-ordinated action between this many central banks means that the Fed feels the situation is starting to get away from them - quickly - and they foresee a possible need for more money in the near term than the Treasury has at its disposal to dump into the Fed.

[sbelew]

“What happens when they figure out that there aren’t enough assets in the world to settle all of the outstanding debt??”

Collapse or war, or both.

[ThePythonicCow]

That's Senator Everett Dirksen's line. "If you owe the bank $10,000, you have a problem. But, if you owe the bank $1,000,000, the bank has a problem..."

[autumnraine]

As my sleazeball ex-husband says “As long as I owe you that money, you are never broke”.

[autumnraine]

They may be finding that out now.