May 10, 2010Bank of Japan joins five central banks to support markets
The Bank of Japan on Monday joined the central banks of Europe, the United States, Britain, Canada and Switzerland to support financial markets by preventing dollar shortages during the Greek debt crisis.
The BoJ joined the other banks in re-establishing so-called dollar liquidity swap facilities with the US Federal Reserve, revitalising emergency measures that were applied when the global financial crisis erupted in 2008.
The five Western banks earlier said the move aimed "to help improve liquidity conditions in US dollar funding markets and to prevent the spread of strains to other markets and other financial centres."
Japan's central bank said it had joined the coordinated action and decided to re-establish a "temporary US dollar swap agreement with the Federal Reserve as well as to re-establish US dollar funds supplying operations."
It said the swap line would be effective until January 31, 2011.
"The bank will continue to strive to maintain financial market stability through proper implementation of money market operations," said a BoJ statement after a policy board meeting.
The policy board also decided, as expected, to leave its benchmark rate at a rock bottom 0.1 percent as part of its long-running efforts to stimulate the world's second biggest economy after its worst recession in decades.
The six central banks' joint action came after a European deal to make 750 billion euros, almost one trillion dollars, of crisis funds available in loans to troubled euro economies, in tandem with the International Monetary Fund.
Tokyo stocks, the first major exchange to reopen after the announcements in Brussels, jumped early Monday on relief over the huge aid package.
The euro surged above the 1.29 level against the dollar, up from 1.2755 dollars in New York late Friday.
AFP Global Edition
