TOKYO: The Bank of Japan, the US Federal Reserve, the European Central Bank and three other major central banks on Friday announced their decision to further enhance their dollar liquidity supplies to help private-sector institutions weather the impact of the new coronavirus pandemic.
The additional step comes as both financial institutions and nonfinancial businesses are increasing procurements of dollar funds to prepare for economic and financial market turmoil amid the virus crisis.
The first set of measures was announced last Monday. Using the series of steps, the six central banks, also including the Bank of Canada, the Bank of England and the Swiss National Bank, aim to stabilize the global financial markets.
The six banks supply dollar funds procured under their liquidity swap line arrangements to financial institutions.
As the additional step, the central banks will increase the frequency of seven-day liquidity-supplying operations "from weekly to daily." The daily operations will begin on Monday and remain in place until the end of April.
Under the first package, the banks started supplying three-month dollar funds, on top of seven-day liquidity, to allow more flexible funding, and lowered the interest rate on the lending.
Operations for three-month dollar liquidity supplies will continue to be conducted once a week.