Top central banks, including Fed, in pre-emptive strike against euro collapse

A coordinated action by the world's top central banks in easing dollar swaps will prevent the siezing up of short term credit in the event that things get worse in Europe. Reuters: The U.S. Federal Reserve, the European Central Bank and the central banks of Canada, Britain, Japan and Switzerland said in a joint statement they had agreed to lower the cost of existing dollar swap lines by 50 basis points from December 5. Other measures included setting up bilateral swap arrangements between the central banks so that any bank could tap additional liquidity in their own currencies if necessary. The swap arrangements are good through Feb 1, 2013. In the United States, the Fed noted that banks were not having difficulty now getting funds in short-term finding markets. But if conditions deteriorate, the U.S. central bank said it has "a range of tools available" to use as a backstop and would deploy them as necessary. The surprise coordinated move by central banks was aimed at preventing...(Read Full Post)