Central Banks Take Joint Action to Ease Debt Crisis

[Gerald]

WASHINGTON — The Federal Reserve moved Wednesday with other major central banks to buttress the financial system by increasing the availability of dollars outside the United States, reflecting growing concern about the fallout of the European debt crisis. The banks announced that they would reduce by roughly half the cost of an existing program under which banks in foreign countries can borrow dollars from their own central banks, which in turn get those dollars from the Fed. The banks also said that loans will be available until February 2013, extending a previous endpoint of August 2012. “The purpose of these actions is to ease strains in financial markets and thereby mitigate the effects of such strains on the supply of credit to households and businesses and so help foster economic activity,” the banks said in a statement. The participants in addition to the Fed were the Bank of England, the European Central Bank, the Bank of Japan, the Bank of Canada and the Swiss National Bank. Stocks soared in response to the announcement, as some analysts hailed evidence that governments were showing greater determination to address the crisis. The Standard & Poor’s 500-stock index, a broad gauge of the American stock market, was up 3.4 percent in midday trading. The DAX, which tracks Germany’s market, was up 5 percent late in the European trading day.

http://www.nytimes.com/2011/12/01/bu...s.html?_r=1&hp

Note: November 30, 2011