The Federal Reserve and central banks around the world have yesterday flooded banks with cash to alleviate the worst global banking crisis by injecting additional $630 billion as concerns over the stability of world financial system increased.

Interbank lending rates climbed to new highs yesterday and this latest cash injection came because of the stresses in short-term funding markets where banks refused to lend each other amid a high sense of apprehension of the each others financial health.

The Federal Reserve action came hours before Treasury Secretary Henry Paulson's $700-billion bail out plan to rescue the financial institutions and restore a semblance of confidence in the global market was voted down by US lawmakers in the House of Representatives by 228 votes to 205.

The Fed increased its existing currency swaps with foreign central banks by $330 billion to $620 billion to make more dollars available worldwide. It has raised the term auction facility by $300 billion to $450 billion.

The banks involved in the increased central bank swap lines which will increase the liquidity of the dollar are ECB with $240 billion, Bank of Canada with $30 billion, $80 billion by the Bank of England, $120 billion by the Bank of Japan, $15 billion by Danish central bank, $15 billion by Norway's central bank, $30 billion by the Reserve Bank of Australia, $30 billion by the Swedish central bank and $60 billion by the Swiss National Bank.

The Federal Reserve said in a statement that it would enlarge term funding auctions to head off a cash crunch at financial institutions which is likely at the year end and added that ''Central banks will continue to work together closely and are prepared to take appropriate steps as needed to address funding pressures."

The main aim of the central banks around the world is to increase the size of the 84-day maturity Term Auction Facility to $75 billion per auction from $25 billion from October 6.

It will provide two forward TAF auctions totaling $150 billion in November to meet term-funding needs over year-end and increasing swap authorization limits with nine central banks to a total of $620 billion, from $290 billion previously.

Stocks around the world have taken a massive beating and credit markets deteriorated all the more, making governments burn the midnight oil in Europe as they scramble to save more financial institutions from collapse. In the past two days European governments have rescued four banks.

The Federal Reserve which had about $800 billion in reserve before the financial crisis began has now less than $300 billion because of new lending programs for banks and Wall Street firms.