Global Central Banks Announce Further Coordinated Liquidity Measures

The European Central Bank (ECB) announced "coordinated central bank action to address pressures in global money markets".  The move follows the announcement of joint USD liquidity operations announced by the bank in mid-September.  As part of the action, the central banks involved (Canada, UK, Japan, EU, US, Swiss) will lower the interest rate on US dollar liquidity provision arrangements by 50 basis points, with the new rate being the US dollar Overnight Index Swap (OIS) rate plus 50 basis points.  The banks also agreed to swap arrangements which would ensure liquidity through to the 1st of February 2013.  The moves are designed to counter the tightening up of credit markets and liquidity in the European banking system.