Central Banks Prop Up Money Markets

The Federal Reserve, along with the Bank of Canada, the Bank of England, the European Central Bank, the Bank of Japan, and the Swiss National Bank Thursday in a statement announced 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," the statement said.

The Fed authorized a $180 billion expansion of its temporary reciprocal currency arrangements, or swap lines. The central bank said its increased capacity will be available to provide dollar funding for both term and overnight liquidity operations by the other central banks.

All of the reciprocal currency arrangements have been authorized through Jan. 30, 2009, the central banks said.