Business | Banking
US moves to stem global panic
The US Federal Reserve pumped a record daily total of $105 billion of temporary reserves into the banking system via repurchase operations on Thursday as global central banks stepped up intensive efforts to free up near paralysed short-term lending markets.
- By Gaurav Ghose/Financial Features Editor
- Published: 00:18 September 19, 2008
- On the New York Stock Exchange yesterday, stocks began to stabilise as the Dow Jones index fell only about 19 points, a far cry from the plunge of previous days.
- Image Credit: Bloomberg
New York: The US Federal Reserve pumped a record daily total of $105 billion of temporary reserves into the banking system via repurchase operations on Thursday as global central banks stepped up intensive efforts to free up near paralysed short-term lending markets.
Thursday's total exceeds the previous biggest daily injection the Federal Reserve had ever added to the banking system, of $81.25 billion in September 2001 after the attacks on New York and Washington.
The Fed also made an extra $180 billion available to central banks worldwide to lend on to local commercial banks in a bid to get dollars circulating in over-night and term money markets, reaching a total of $247 billion. The drastic steps were aimed at combating shock waves from the worst financial upheaval since the Great Depression of the 1930s.
Asian markets closed lower, but the Fed action helped send European stocks higher after three days of losses. Wall Street initially rallied, but trim-med gains as the morning wore on.
The interventions came as US President George W. Bush expressed concerns on Thursday about the turmoil in financial markets and said his administration was prepared to go beyond the "extraordinary measures" already taken to strengthen and stabilise them.
"The American people can be sure we will continue to act to strengthen and stabilise our financial markets and improve investor confidence," he told reporters in a brief statement outside the Oval Office at the White House. Spokes-woman Dana Perino declined to comment on what possible further steps were under consideration.
In Bush's first remarks on the financial crisis, he said the recent steps by his administration and the Federal Reserve were necessary. "The American people are concerned about the situation in our financial markets and our economy, and I share their concerns," he said.
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