Central banks, including the Bank of England, to increase the flow of US dollars
Central banks have hurried to keep the cash rolling through the world’s financial systems after the losses of two US banks, and the rescue of Credit Suisse sent shockwaves across international markets.
Six central banks, incorporating the Bank of England, declared they would raise the flow of US dollars from Monday.
Such actions were last taken during the 2008 economic crisis and at the height of the Covid outbreak. It arrived after UBS bought Credit Suisse in a state-backed rescue agreement.
Stock markets have dropped sharply since Silicon Valley Bank and Signature Bank tumbled in the US last week, sparking worries about runs on other banks.
They stayed under pressure on Monday despite the retrieval of Switzerland’s second-largest lender this weekend.
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Central banks have emphasised the international banking system is safe. Still, there are concerns that other lenders could trouble them after recent interest rate peaks left some sitting on significant failures.
In a report, the Bank of England, Bank of Japan, Bank of Canada, the European Central Bank, US Federal Reserve and Swiss National Bank said they had founded the coordinated measure to keep credit flowing.
The central banks told the move served as a “crucial backstop to relieve strains in international funding markets” and to ease the impact on the credit supply to households and businesses.
Rather than borrowing on the open market, British banks will be able to go straight to the Bank of England, and it will get it from the US Federal Reserve.
