TOKYO (MNI) – The Bank of Japan announced Monday said it will
consider re-opening its U.S. dollar-yen swap lines with major central
banks to help calm funding jitters in Europe in the wake of the Greek
fiscal crisis.
In a separate statement, the BOJ also said it is holding an
extraordinary policy board meeting at 1100 JST (0200 GMT) on Monday to
discuss the dollar swap deal.
Deputy Governor Hirohide Yamaguchi will chair the meeting and hold
a news conference at 1400 JST (0500 GMT), the BOJ said. Governor Masaaki
Shirakawa is out of the country attending a monthly meeting of the Bank
for International Settlements.
The BOJ first adopted a funding arrangement with the U.S. Federal
Reserve in October 2008 to help revive interbank market liquidity at the
height of the global financial crisis. The BOJ’s temporary funding
operations in U.S. dollars at fixed interest rates were extended twice
but discontinued on Feb. 1, 2010.
On coordinated central bank actions, the BOJ issued the following
statement today:
“In response to the re-emergence of strains in U.S. dollar
short-term funding markets in Europe, the Bank of Canada, the Bank of
England, the European Central Bank, the Federal Reserve, the Swiss
National Bank are announcing the re-establishment of temporary
U.S.-dollar liquidity swap facilities.
“These facilities are designed to help improve liquidity conditions
in the U.S. dollar funding markets and to prevent the spread of strains
to other markets and financial centers.
“The Bank of Japan will be considering similar measures soon.
“Central banks will continue to work together closely as needed to
address pressures in funding markets.”
The European Central Bank announced earlier Monday that it would
intervene in “dysfunctional” European public and private debt markets to
restore order. The operations, which it did not spell out in full, will
include adding dollar liquidity.
tokyo@marketnews.com
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