ECB, BoE offer up another US$60 billion to global money markets


By GEORGE FREY, AP

FRANKFURT, Germany — European central banks offered up more money to markets Wednesday, injecting another US$60 billion in overnight funds, to keep the financial system flush with cash.

The European Central Bank offered US$50 billion and the Bank of England offered US$10 billion in overnight operations.

ECB President Jean-Claude Trichet said Tuesday the central bank “Will continue to support solvent banks’ access to liquidity and the functioning of the money market as long as necessary.”

The Swiss National Bank said it also maintained its overnight offering of dollars “in a generous and flexible manner,” without providing further details.

The Bank of England also said it was offering another US$30 billion to markets, on top of the overnight operation.

“This is alongside the continuing operations under the swap facility to lend US$10billion of funds overnight, and the outstanding one week operation for US$30 billion conducted last Friday. These operations will therefore bring the total provision of U.S. dollar liquidity by the Bank to US$70 billion,” it said.

The BoE said it planned to lend another US$30 billion on Oct. 3 in a seven-day tender that will mature on Oct. 10.

Central banks worldwide, including the Fed and ECB, have been pumping billions into money markets worldwide since Lehman Brothers Holdings Inc. filed for bankruptcy two weeks ago.

Analysts said the banks’ support of the financial system would have to go on for some time.

“It’s a delicate time in terms of liquidity; I see central banks pumping money into the system for at least the next three to four months,” said Gilles Moec, an economist at Bank of America in London.

“I think they’ll have to do that until things are normalized and that they’re prepared to go all the way. So far, I’ve been impressed by their swift reactions,” Moec said.