Central Banks Throw $360B Lifeline

Effects of worldwide effort on markets still unfolding

By Rob Quinn, Newser Staff

Posted Sep 18, 2008 4:34 AM CDT

(Newser) – The Fed has joined forces with central banks in Europe, Japan and Canada to pump more dollars into the global financial system in a bid to fend off economic catastrophe, Bloomberg reports. The funds—$180 billion from the Federal Reserve and nearly as much from the other banks—are being made available for auction to global money markets in an effort to ease the crisis created by the collapse of Lehman Brothers and deepening fears about the economy, reports the New York Times.

"There's a complete lack of faith in the markets,'' a London economist said. "There's cash hoarding and people losing trust in banks, so the central banks are acting to relieve that.'' The effect of the move on worldwide markets was still unfolding early today, but it appears to have pulled the Hong Kong market out of a dive after shares plummeted more than 7%, reports the Wall Street Journal. Other Asian markets were mixed.

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Traders work on the floor of the Brazilian Mercantile and Futures Exchange in Sao Paulo. Central banks worldwide are joining forces to avoid a deeper market crisis. (AP Photo/Andre Penner)

The US Federal Reserve has coordinated efforts with central banks around the world to pump US dollars into the financial system. (Getty Images)

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The lack of dollars has been making the financial crisis worse around the world, which is why we now have this coordinated response. - Robert Barrie, an economist at Credit Suisse Group in London

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Central Banks Throw $360B Lifeline