Fed teams up with BoE, others in currency swap for US firms

The US Federal Reserve, the Bank of England, the European Central Bank, the Swiss National Bank and the Bank of Japan announced a currency swap arrangement that will give the US central bank access to as much as $290 billion in euros, yen, British pounds and Swiss francs.

The Federal Reserve in turn will  lend this to US institutions with pressing short-term needs for loans in those currencies.

''Should the need arise, euro, yen, sterling and Swiss francs would be provided to the Federal Reserve via these additional swap arrangements with the relevant central banks,'' the Fed said in a statement yesterday.

''Central banks continue to work together and are taking steps as appropriate to foster stability in global financial markets,'' it added.

The arrangements ''would enable the provision of foreign currency liquidity by the Federal Reserve to US financial institutions,'' the Bank of Japan said.

The swap lines, which are authorised until October 30,  allow the Fed to borrow 30 billion British pounds ($44 billion), 80 billion euros ($107 billion), 10 trillion yen ($99 billion), and 40 billion Swiss francs ($35 billion) to American companies, the statement added.