"Central banks moved to ease the strain the European debt crisis is putting on the global financial system by lowering the rate they charge for emergency access to U.S. dollars.
In a joint announcement Wednesday, the Federal Reserve, the European Central Bank, the Bank of Japan, the Bank of England, the Bank of Canada and the Swiss National Bank said the move is necessary to “ease strains in financial markets and thereby mitigate the effects of such strains on the supply of credit to households and businesses and so help foster economic activity.”
Starting next week, the central banks will drop the rate they charge to exchange U.S. dollars for other currencies by half a percentage point. The new charge for “swaps” will be half a percentage point above the U.S. dollar overnight index swap, or OIS. A swap is essentially a loan backed by collateral. The OIS market is where banks go to borrow dollars or other currencies on a short-term basis..."
And there is no liquidity issues right now? Give me a break.
- Read the full article at the Globe and Mail, here: