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Central banks take action to calm markets

6 years ago5 views

Five central banks have acted to offer three-month US dollar loans to mainly European commercial banks in order to prevent money markets from freezing up because of the continent's sovereign debt crisis.

The European Central Bank said on Thursday that it would hold three fixed-rate operations between October and December to offer banks as many dollars as they needed, in order to ease any funding crunch in the year-end period.

The ECB said it was acting in co-ordination with the US Federal Reserve, the Bank of England, the Bank of Japan and the Swiss National Bank.

The announcement sharply boosted the euro and European bank shares, with France's BNP Paribas jumping as much as 22 per cent.

Asian markets were up in early trade on Friday on the back of the news as well, with Tokyo's Nikkei-225 up 2.04 per cent and Hong Kong's Hang Seng up 2.14 per cent at 04:35 GMT.

Jane Foley, Rabobank's senior foreign exchange strategist, tells Al Jazeera the moves are not a solution to the crisis, but a treatment.

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