Central banks take joint action on liquidity

The collapse of Lehman Brothers, coupled with the near failure of HBOS in the UK and AIG in the US, has caused interbank lending rates to rocket. The US Federal Reserve announced it has authorised other central banks to put up $180bn in dollar funds for auction. The Bank of England, the European Central Bank, the Bank of Canada, the Swiss National Bank and the Bank of Japan will all pump cash into their financial markets in order to prevent the current crisis from worsening. Recent revelations, which have rocked stock markets across the globe, have caused banks to hoard cash. The cost of...