Asian central banks took further steps on Monday to calm markets roiled by fears over a credit squeeze, with the Bank of Japan injecting $5.1bn into the banking system and others pledging to follow suit if needed, reports Reuters. The FT reports that central banks are expected to continue intervening in the money markets on Monday in efforts to unblock the financial system after last week’s turmoil. Market speculation is mounting that the ECB will seek to arrange a currency swap with the Fed that would allow it to lend dollars to European banks struggling to meet short-term dollar funding needs. Billions in dollar-denominated borrowing by European banks comes due in the next few days amid fears that US banks are unwilling to extend short-term credit to European counterparts perceived as vulnerable to the market turmoil. Separately, the FT reports that investors are bracing themselves for turbulent trading on Monday.
