Central banks join forces to ease debt crisis
Reacting to the deepening Eurozone debt crisis, the Federal Reserve and five other major central banks joined forces Wednesday to offer European lenders easier access to dollars in an attempt to quell growing fears of a global funding crunch.
The Fed said its coordinated action with the European Central Bank, the Bank of Japan and three others was intended to "ease strains in financial markets" and mitigate the resulting effects of a credit squeeze for businesses and households.
The announcement gave an immediate lift to European markets, and U.S. stock futures surged.
The action, which follows a similar coordinated move in September, lowers the cost of so-called dollar swap lines to increase the flow of cash to European lenders. The new pricing would take effect next Monday.
Separately, the People's Bank of China announced a plan to inject more cash into its economy by lowering bank reserve requirements by a half a percentage point. It was Beijing’s first monetary easing in three years, and comes amid signs of economic slowing in the world's second-largest economy.
-- Don Lee in Washington
Photo: The U.S. Federal Reserve building in Washington. Credit: Bloomberg News