Central banks around the world have cooperated on a massive liquidity injection, with the federal reserve adding $50 billion in reserves by arranging overnight purchasing agreements. This adds to the $70 billion the Fed added yesterday, which was the largest injection since 9/11. The repo agreements are a temporary measury whereby the Fed buys bonds and securities from primary dealers, which the dealers promise to buy back later. The Fed wasn’t the only central bank to act. Bloomberg:
Central banks from Tokyo to Frankfurt injected cash into their financial systems in a bid to calm markets.
The European Central Bank awarded 70 billion euros ($99.8 billion) in a one-day money-market auction today. The Bank of Japan added a total of 2.5 trillion yen ($24 billion) and the Bank of England pumped in 20 billion pounds ($36 billion). Counterparts in Australia and Switzerland took similar steps.
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