Six central banks participate in the currency exchange arrangement.
Six The influential central bank announced on Sunday that it would introduce new measures to ease the tensions in the financial markets in recent days.
Central banks said they would increase the availability of dollars in the foreign exchange market by offering day-long currency swaps instead of the usual week-long currency swaps.
Currency exchange arrangements have been agreed upon by the central banks of Great Britain, Europe, Japan, Canada, Switzerland and the United States. With the arrangements, the central banks aim to secure the operation of the financial markets so that the financing of companies and households is not jeopardized.
Last In the past few weeks, the difficulties of large commercial banks and the outright collapses in the United States and Switzerland have spread a lot of uncertainty to the financial markets.
When there are disturbances in the financial markets, commercial banks outside the currency area usually have difficulties in obtaining currency directly from the foreign central bank responsible for it.
If the domestic central bank of the commercial banks has a currency exchange arrangement with the relevant foreign central bank, the commercial banks receive funding from their central bank without it having to use its own foreign exchange reserves.
Swiss the Federal Council, the Central Bank and the Financial Supervisory Authority facilitated a solution at the end of the week, with which the Swiss UBS announced on Sunday that it would buy its competitor Credit Suisse for three billion Swiss francs, or 3.015 billion euros.
The Federal Council offers UBS and Credit Suisse emergency financing of 100 billion francs, or 101 billion euros. In addition to this, the Swiss National Bank also announced that it would offer 100 billion francs of emergency financing, guaranteed by the Federal Council.
Considerable instability in the financial market already started a week ago, when the US Silicon Valley Bank collapsed as a result of a deposit flight.
At the beginning of last week, the Swiss Credit Suisse, which had been in dire straits for a long time, came into the market’s firing line. Its largest shareholder stated that he was unwilling for additional financing.
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