Central banks are taking co-ordinated action to lend extra cash to banks.
The Bank US authorities shut down Washington Mutual ...
Germany's Commerzbank Agrees to Buy Dresdner ... of England, US Federal Reserve, European Central Bank and Swiss National Bank will be involved.
The Bank of England will be lending an extra $30bn (Ј16bn) for a one week period, $10bn overnight and $40bn in three-month loans.
The central banks said that the extra cash was intended to help banks as they approach the end of the financial third quarter next week.
Banks have been turning to their central banks for funding because they have been struggling to borrow from each other as they would usually do.
One of the reasons they have been reluctant to lend to each other has been the fear of further bank failures and the news that Washington Mutual has become the biggest US bank to fail will do nothing to help that situation.
Banks will be able to use their mortgage books as security on the loans.
(BBC)
<< Back