U.S. Extends 'Swap' Deal With 4 Foreign Central Banks

Washington, D.C. (AHN) - The U.S. Federal Reserve, in tandem with several foreign central banks, on Wednesday pumped $30 billion into money markets overseas, in a concerted effort to stave off the global credit crunch.

The move was in line with the temporary "swap" arrangements entered into by the Federal Reserve with the central banks of Australia, Denmark, Norway and Sweden. Under the deal, the United States will supply the four central banks with dollars in exchange for their currencies.

In a statement, the Fed said, "These facilities, like those already in place with other central banks, are designed to improve liquidity conditions in global financial markets."

"Central banks continue to work together during this period of market stress and are prepared to take further steps as the need arises," it added.

The $30 billion infusion will be divided between the four foreign central banks as follows: $10 billion each to Australia and Sweden and $5 billion each to Denmark and Norway.

The fresh funds from the five central banks is an indication of how seriously the governments across the globe want to put more money into the financial markets to fuel economic activity.

Last week, the Fed and other foreign central banks plowed an estimated $180 billion into money markets overseas. The move was participated in by the European Central Bank, the Bank of Japan, the Bank of England, the Swiss National Bank and the Bank of Canada.