RBA joins central banks in currency exchange
Posted
The Reserve Bank has joined a coordinated effort with other central banks to ease the financial market turmoil.
The financial crisis has left global funding markets in gridlock with big financial institutions reluctant to let go of money.
The United States Federal Reserve says so far $US247 billion has been poured into the system to try and get funds moving around the world again.
Australia's Reserve Bank has now agreed to join forces with the central banks of Denmark, Sweden and Norway to add an extra $US30 billion to the system through a swap facility, designed to improve liquidity conditions in global financial markets.
The RBA is contributing $US10 billion to the facility.
It has also announced it is offering a short-term deposit facility to certain institutions.
The RBA says central banks are working together during the market stress and are prepared to take more steps as necessary.
Westpac senior economist Justin Smirk says the move will allow global funding markets to operate.
"It's allowing the system time to settle down and find its new balance," he said.
