Banks unite to treat credit crunch problem

13 December 2007

Unprecedented action by central banks to inject money into world money markets

Yesterday saw emergency action as five central banks, including the Bank of England, joined forces to inject funds into world money markets.

A total of £50bn will be put forward by the UK, US, Swiss, Europeans and Canadians to try to prevent the current credit crunch getting worse.

A huge amount of this money has been offered to commercial banks to try to get them lending to each other again, a move said to be a revelation of how serious the problems in financial markets have become.

On speaking to the Guardian, the chancellor, Alistair Darling, said: “This was both necessary and very welcome. It sends a very clear signal across the world that central banks stand ready to do whatever is necessary.”

The past few weeks have seen harder times for those wishing to get credit as banks have been reluctant to lend with the market’s current status. Additionally, banks have needed to hold on to their cash in order to balance their books at the end of the year.