The European Central Bank said it will offer extra cash to banks to soothe credit markets as part of a joint effort with the US Federal Reserve.
The ECB called for bids in a one-day refinancing operation tender up to $40 billion at a single rate. Bids must be submitted by 9.45am in Frankfurt. The result will be announced at 11.45am. The ECB will accept a maximum number of two bids.
The Fed arranged to channel $30 billion into the global financial system today by opening currency swap lines with four central banks to ease short-term dollar funding in markets worldwide.
The Fed and central banks in Australia, Denmark, Norway and Sweden set up the currency exchange to address "elevated pressures" in dollar funding in markets, the Board of Governors said in a statement.
The joint action is the latest attempt by central bankers to fight the financial crisis, which deepened last week after Lehman Brothers Holdings filed for bankruptcy and the US government took over American International Group.
Last week, the Fed almost quadrupled the amount of dollars central banks can auction around the world to $247 billion in a coordinated bid to ease the worst crisis facing financial markets since the aftermath of the 1929 Wall Street crash.
It expanded its temporary swap lines with the European Central Bank and Swiss National Bank by $70 billion, and created $110 billion in new facilities with central banks in Japan, England and Canada.
Bloomberg