Business

The Fed to provide Europeans banks with uncapped loans 
By Luisana Suegart from Markets.com
<>In its latest efforts to revive the ailing global financial system, the Federal Reserve said Monday it will lend an unlimited amount of dollars to three central banks in Europe.

For the first time in history, the Fed will provide uncapped loans to the central banks of England, Switzerland, and the European Union in exchange for collateral, the goal being to flood the troubled financial system with much-needed liquidity.

The Bank of England, the European Central Bank and the Swiss National Bank will allocate the loans to private financial institutions in order to unfreeze credit.

“Central banks will continue to work together and are prepared to take whatever measures are necessary to provide sufficient liquidity in short-term funding markets,” said a statement on the Federal Reserve’s website.

The Fed’s announcement is the latest move since global stocks saw the worst declines in history last week. Previous efforts include coordinated interest rate cuts, as well as deposit and bank loan guarantees. Last week, the Fed doubled its auction facility to $300 billion.

 


 

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