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Central Banks Move To Boost Credit Flow

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Three of the world's most powerful central banks unveiled new measures to boost US dollar liquidity for European banks in an effort to help credit flow more freely.

The European Central Bank, the US Federal Reserve and the Swiss National Bank announced new measures to make dollars available for a longer period.

In December the Fed, ECB and Swiss National Bank responded to the international financing crisis by agreeing to currency swaps that allowed the ECB and SNB to provide dollars directly to European banks.

Many banks had invested heavily in securities backed by US mortgages, and when that market dried up, the banks found it hard to obtain the dollar liquidity needed to keep their operations afloat.

An initial 28-day period is being extended since it has become clear that banks need the cash for longer periods to calm the market's still troubled waters.

UniCredit Markets economist Harm Bandholz said the move showed that "the Fed acknowledges that circumstances in financial markets remain fragile".

At the same time, the Fed said it would let Wall Street firms draw emergency loans into next year and give financial companies more options to help them overcome credit problems.

So the central banks are still trying to bail out banks.

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  • 395 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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