WASHINGTON — The Federal Open Market Committee has authorized new foreign currency liquidity "swap lines" with four major central banks, according to a notice the Federal Reserve released Monday morning.
The action authorizes currency arrangements with the Bank of England, the European Central Bank, the Bank of Japan and the Swiss National Bank, making way for the U.S. central bank to receive euro, yen, sterling and Swiss francs should the need arise.
The swap lines enable the Fed to provide currency liquidity to U.S. financial firms.
"Central banks continue to work together and are taking steps as appropriate to foster stability in global financial markets," the Fed notice said.
The arrangements enable the Federal Reserve to provide liquidity in sterling in amounts of up to 30 billion, in euro in amounts of up to 80 billion, in yen in amounts of up to 10 trillion, and in Swiss francs in amounts of up to 40 billion.
The swap lines have been authorized through Oct. 30, 2009.