Central Banks Add $72 Billion to Markets to Stem Credit Crunch
The Federal Reserve joined the European and Japanese central banks on Monday by continuing to add funds to the global banking system to stem a potential credit crunch.
The Fed added a relatively tiny $2 billion when U.S. markets opened at 9:30 am Monday following an injection of $38 billion last week. It was the Fed's largest injection of liquidity since the Sept. 11 attacks six years ago.
Earlier on Monday, the European Central Bank injected $65.12 billion in the euro-zone money markets, while the Bank of Japan pumped $5.1 billion into the banking system.
"This morning, we can say a big thank you to the European Central Bank," said Arthur Cashin, UBS director of floor operations. "Aside from throwing more money into the system, they also announced that they thought the credit markets were beginning to normalize."
The central bank moves are aimed at preventing a further credit squeeze that erupted last week when subprime loan problems began surfacing in Europe.