ECB, Swiss central banks offer liquidity
The European Central Bank and Swiss National Bank said Wednesday they will increase the amount of dollars offered to USD 50 billion in the latest series of tenders.31 July 2008
FRANKFURT - The European Central Bank and Swiss National Bank said Wednesday they will make billions of US dollars available to banks still hungry for liquidity.
The ECB - central bank for the 15-nation euro zone - said it will increase the amount of dollars offered to USD 50 billion in the latest series of tenders, with the auctions to come every two weeks. The separate but related tenders' maturity will be 28 days and 84 days.
Starting 8 August, the bank will conduct 84-day operations along with its ongoing 28-day tenders. The bank said the operations every two weeks will alternate between USD 20 billion set to mature after 28 days and operations of USD 10 billion with an 84-day maturity.
That means that there will be a three 84-day operations and one 28-day operation aimed at making as much as USD 50 billion available.
During the transition phase, though, the amount will be temporarily increased to USD 55 billion.
The bank said that the tenders would continue as long as "needed in view of the prevailing market conditions".
Similarly, the Swiss National Bank said it would start auctioning 84-day tenders on 12 August, while continuing to offer 28-day tenders, too.
"Specifically, the SNB will conduct auctions once every two weeks, alternating between a term of 84 days for a maximum of USD 2 billion and a term of 28 days for a maximum of USD 6 billion," the bank said in a statement.
"The SNB plans to make US dollar liquidity available for as long as it considers this to be necessary."
Both announcements came shortly after the Fed said it was extending its emergency borrowing programme to Wall Street firms and is taking other steps to ease a severe credit crunch that has hobbled the national economy.
[AP / Expatica]