Fed Opens New Credit Lines

from the AP:

By CHRISTOPHER S. RUGABER

WASHINGTON (AP) - The Federal Reserve said Monday it has expanded credit lines with the central banks of Japan, Switzerland, the United Kingdom and European Union that will provide foreign currency to U.S. banks - if needed.

Under currency swap arrangements, which were common last fall when the credit crisis intensified, the Fed provides dollars in exchange for reserves of the other nations' currencies.

"Should the need arise, euro, yen, sterling and Swiss francs would be provided to the Federal Reserve via these additional swap agreements with the relevant central banks," according to the Fed release. "Central banks continue to work together and are taking steps as appropriate to foster stability in global financial markets."

The Fed said the expanded credit lines, authorized through Oct. 30, are worth the equivalent of up to $45 billion with the Bank of England, $108 billion with the European Central Bank, $99 billion with the Bank of Japan and $35 billion with the Swiss National Bank

Separately, the Fed said it will auction off $150 billion in short-term loans to nonbanks and other financial institutions under a program that began last year. The auctions provide loans to those institutions on similar terms that the central bank provides to banks, and are intended to stabilize the U.S. financial system.