The Fed will inject huge quantities of cash into financial markets as part of a coordinated global attack on the credit crisis, Ben Bernanke announced today. The central bank will loan out another $200 billion, this time on a 28-day basis rather than overnight, the AP reports. The effort will coordinate with the European Central Bank and the central banks of Canada, England, and Switzerland.
The Fed said it acted "to promote liquidity in the financing markets for Treasury and other collateral and thus to foster the functioning of financial markets more generally." The new loans are a new tool, a Term Securities Lending Facility, and will be available by auction once a week starting March 27. The Fed has also bolstered the dollars that can flow to the ECB through “swap lines.”