World central banks act to prevent fresh credit crunch
• Federal Reserve, ECB and Bank of England in co-ordinated move to provide emergency dollar loans to banks
• Fears eurozone crisis will trigger global double-dip recession
• Stock markets soar on news
Wednesday 30 November 2011 13.47 GMT
Central banks from around the world have announced emergency measures to boost liquidity in the global economy and prevent the financial system from freezing up.
In a clear sign that policymakers fear the downturn in the eurozone risks spiralling into a fresh credit crunch – where banks stop lending to each other – they announced "co-ordinated central bank action to address pressures in global money markets".
The Bank of England joined the Federal Reserve, the Bank of Japan, the ECB, the Bank of Canada and the Swiss National Bank in taking the measures. Stock markets around the world surged after the central banks said they would cut the price of emergency dollar loans to cash-strapped banks by 0.5
percentage points, and extend the scheme until February 2013.
They will also establish "temporary bilateral liquidity swap arrangements" between one central bank and another, allowing liquidity to be provided at short notice in any currency "should market conditions so warrant".
Analysts said the move would help to unjam the financial markets.
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