Top central banks extend dollar credit lines

Coordinated decision among Fed, ECB, others continues measure to buttress financial system

Associated Press

FRANKFURT, Germany (AP) -- Top central banks are extending their arrangements to swap dollars and other currencies to make sure banks have the money they need.

The decision announced Thursday extends a crisis measure that was to expire Feb. 1, 2013. Now it will be extended for another year.

Taking part are the U.S. Federal Reserve, the European Central Bank, the Bank of England, the Swiss National Bank and the Bank of Canada. The Bank of Japan is to consider the measure at its next meeting.

The idea behind making each other's currencies available is so banks can get whatever currency they need to meet their obligations. The measure helps stabilize a financial system dealing with the fallout of five years of turmoil, a debt crisis in Europe and slowing growth in emerging markets.

The European Central Bank also said it would continue "until further notice" its operations to lend dollars to banks for one week and three months.

The coordinated action follows recent efforts by the ECB, Fed and Bank of England to support their economies. The Fed said this week it would keep interest rates at their current record low near zero until unemployment in the U.S. falls to 6.5 percent, and is buying government and mortgage-backed bonds to lower longer-term interest rates and increase the supply of money in the economy. The ECB has said it could buy bonds issued by heavily indebted countries. That step could drive down borrowing costs for financially troubled governments and indirectly for companies.

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