Scrambling to break the grip of a worsening global credit crisis, the Federal Reserve, and central banks in Europe, Canada and Asia pumped more than $300 billion into money markets on Thursday to combat shock waves from the worst financial upheaval since the Great Depression of the 1930s. Stocks rallied worldwide as a result, though the US dollar and government debt fell, their appeal as havens ebbing after central banks flooded markets with cash to bolster investor confidence battered by the week's financial maelstrom. The move by the central banks was aimed at boosting waning confidence that governments can stop the crisis from spinning out of control and at getting banks around the world to open their ever-tightening purse strings. Asian markets closed lower, but the Fed action helped send European stocks higher after three days of losses. Worries that other financial companies could fail and further upend the economic system may cast a pall on the central banks' step, which spread billions of dollars around the world in exchange for foreign currencies. The Federal Reserve Bank of New York, in two operations, injected $55 billion into temporary reserves in the US, a move aimed to help ease a strained financial system in danger of freezing up. In a statement, the Fed said it had authorized the expansion of swap lines, or reciprocal currency arrangements, with the other central banks, including amounts up to $110 billion by the European Central Bank and up to $27 million by the Swiss National Bank. The Fed also said new swap facilities had been authorized with the Bank of Japan for as much as $60 billion; $40 billion for the Bank of England and $10 billion for the Bank of Canada. All told, Fed action increased lines of cash to central banks by $180 billion to $247 billion. At home, the New York Federal Reserve acted to ease a spike in overnight lending rates by injecting $55 billion into the banking system in two operations of temporary reserves. The European Central Bank, the Bank of Japan, Bank of England (BoE), Bank of Canada and the Swiss National Bank all joined what the BoE called “coordinated measures designed to address the continued elevated pressures in US dollar short-term funding markets.” The Bank of Japan made the latest of a series of interventions, pouring in the equivalent of 23.9 billion dollars into money markets. In Moscow, President Dmitry Medvedev on Thursday said the country's financial market will receive a total of 500 billion rubles ($19.6 billion) of additional support, including half from the budget. Russia extended emergency state support available to financial markets to $130 billion on Thursday to help prop up sinking stocks and improve liquidity after the worst stock market losses in a decade. Share trading on Russia's two main exchanges was shut for a second day and foreign exchange reserves were down $13 billion on a week ago. The Central Bank on Thursday said that Russia's international reserves had lost $13.3 billion, going down from $573.6 billion on Sept. 5 to $560.3 billion dollars on Sept.12.
