The world’s central banks unleashed a co-ordinated assault on the credit squeeze in global financial markets on Wednesday, setting off a wild day of trading as investors tried to make sense of a barrage of moves to boost market liquidity. The Federal Reserve, ECB, Bank of England, Bank of Canada and the Swiss National Bank all announced steps to make cash more readily available to banks. The Bank of Japan declared its support. The simultaneous actions helped ease pressure in money markets, although conditions remained strained. One month Libor was expected to set at 4.99% on Thursday, down from 5.10% on Wednesday. Stocks also gave back most of their gains after surging in response to the announcements. To the FT’s Martin Wolf, one point is clear: The central banks must be pretty worried to take such joint action, he writes. But whether it is a good reason to stop worrying depends on “if you like huge rescue operations of incompetent bankers”.
