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Fed Lowers Interest Rate on Dollar Swaps

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dipsydoodle Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Nov-30-11 08:38 AM
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Fed Lowers Interest Rate on Dollar Swaps
Edited on Wed Nov-30-11 08:57 AM by dipsydoodle
Source: Bloomberg News

The Federal Reserve cut the cost of emergency dollar funding for European banks as part of a globally coordinated central-bank response to the continents sovereign-debt crisis.

The new interest rate has been reduced to the dollar overnight index swap rate plus 50 basis points, or half a percentage point, from 100 basis points, and the program was extended to Feb. 1, 2013, the Fed said in a statement in Washington. The Fed will coordinate with the European Central Bank in the program, which was also joined by the Bank of Canada, Bank of England, Bank of Japan (8301), and Swiss National Bank (SNBN) are involved in the coordinated action.

The move is aimed at easing strains in markets and boosting the central banks capacity to support the global financial system, the statement said. The cost for European banks to fund in dollars rose to the highest levels in three years today as concerns about a possible breakup of the euro area increased after leaders said theyd failed to boost the regions bailout fund as much as planned.

When theres concerted action by central banks, its definitely good, said Jens Sondergaard, senior European economist at Nomura International Plc in London. But are liquidity injections a game changer when the heart of the problem is in European sovereign debt markets?

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Roy Rolling Donating Member (762 posts) Send PM | Profile | Ignore Wed Nov-30-11 08:50 AM
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1. yeah, of course
Use taxpayer money to bail out European banks and the 1% who own 50% of all stocks. They need the welfare. :sarcasm:
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