Excerpt from: GFT News
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| September 18, 2008 | | Forex reserves are being used to prop the currency market | One of the things that forex reserves do is prop up the currency market. And right now, many of the markets need that. Liquidity is low, the Libor continues to rise and the U.S. financial markets are in turmoil.
As a result, the Federal Reserve has made allowances for central banks around the world to use close to $250 billion to help keep financial institutions going. This means that central banks can give out loans in dollars.
Indeed, this move means that for the first time in history the Bank of Japan will be giving out loans denominated in the U.S. dollar in order to stabilize both the yen and the greenback. For Japan, that means a limit of $60 billion.
Here are some of the allowances for other central banks around the world:
- European Central Bank: $110 billion.
- Swiss national bank: $27 billion.
- Bank of England: $40 billion.
- Bank of Canada: $10 billion.
| Topic Tags: Bank of Japan, central banks, currency market, European Central Bank, Federal Reserve, forex news, forex reserves, U.S. financial markets | |
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