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Central banks move to make more dollars available

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The biggest institutions in the developed world have teamed up to ensure that banks in need of liquidity have access to dollars, sending a shock wave through the currency markets. The Federal Reserve and its equivalents in Canada, the United Kingdom, Japan, Switzerland and the euro zone -- effectively the G-7 -- just cut the interest rate they will charge on dollar liquidity swaps to 50 basis points. That move cuts the cost of borrowing dollars in half. As they say, "The purpose of these actions is to ease strains in financial markets and thereby mitigate the effects of such strains on the supply of credit to households and businesses and so help foster economic activity." Banks have become unwilling to lend again, especially in Europe, where dollar funding costs and interbank lending rates have both returned to 2008-9 credit crisis levels.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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