12 December 2007

Central Banks announce measures to address elevated pressures in short-term funding markets

The US FED together with the Bank of Canada, the Bank of England, the European Central Bank, and the Swiss National Bank are announcing measures designed to address elevated pressures in short-term funding markets.

Actions taken by the Federal Reserve include the establishment of a temporary Term Auction Facility and the establishment of foreign exchange swap lines with the European Central Bank and the Swiss National Bank. 

The Bank of Japan welcomed these measures.  Meanwhile, Japan's money markets function well and the Bank will continue to conduct money market operations so appropriately as to maintain market stability, including supplying sufficient fund over the year-end.

“In Sweden we do not currently see that the banks have any additional need to borrow money in the short term. We are monitoring developments closely and are, as always, ready to take the necessary measures if the need should arise,” says Governor Stefan Ingves.

In addition to its Swiss franc open market operations, the Swiss National Bank will offer a US dollar repo transaction on 17 December 2007. The maximum amount offered will be USD 4 billion. The USD repo transaction against SNB-eligible collateral will be conducted in the form of a variable rate tender auction and will provide funds for 28 days, with settlement on 20 December 2007. This measure is intended to facilitate the US dollar funding of SNB counterparties in the Swiss repo system.

FED press release

ECB press release

BoE press release

BoC press release

Statement Bank of Japan

Statement Riksbank Sweden

Swiss National Bank press release

© Graham Bishop