The European Central Bank (ECB), the Federal Reserve and four other central banks will offer additional borrowing opportunities for banks in the near future. For example, those banks have sufficient money if customers want to withdraw more money in economically uncertain times.
The move was announced hours after UBS’ acquisition of Credit Suisse and should allay concerns among customers and investors.
The ECB, the Fed and the central banks of Switzerland, the United Kingdom, Japan and Canada are offering swap lines every day until at least the end of April. Until now this happened once a week.
In a statement, the central banks call it “an important emergency liquidity measure”, which can address tightness in global markets. Making extra money available should prevent banks from extending fewer loans to businesses and households.
At the American Silicon Valley Bank, a lack of readily available money was one of the reasons for the bank’s collapse. A large part of the money was tied up in financial products that have to be held for longer.
The bailout for Credit Suisse could lead to other banks having less money. This is because shares in Credit Suisse or other financial products linked to that bank have lost value.