Tuesday, August 21, 2007

Are Central Banks Working Together?

From the WSJ:

As expected, the European Central Bank gave cash-hungry institutions extra funds in its regular weekly refinancing operation Tuesday. The ECB allotted 275 billion euros (US$370.84 billion) in one-week funds, which is 46 billion euros more than it estimated banks need for routine business.

Other central-bank injections Tuesday also aimed to calm money markets. The U.S. Federal Reserve injected $3.75 billion, following the $3.5 billion it put into markets Monday. The Bank of Japan put 800 billion yen (US$6.96 billion) into its market, following a 1.0 trillion yen infusion Monday.

The Reserve Bank of Australia bought a total of 3.57 billion Australian dollars (US$2.88 billion) in securities. Meanwhile, Russia's central bank hurried to buoy the weakening ruble and keep money rates stable.

In a rare move, Russia's central bank sold around $4.5 billion dollars on the market Tuesday to help support the ruble, traders said. It also injected 87.8 billion rubles ($3.2 billion) into the market through two one-day securities repurchase agreements.

Japan's finance minister, Koji Omi, said he spoke by telephone with U.S. Treasury Secretary Henry Paulson to work together closely to monitor the recent financial market turmoil.

This looks like a coordinated effort to me. And if it is, all the better.