Central banks pool $114bn bailout fund

The Australian

THE world's leading central banks have announced a co-ordinated bid to prop up the global economy by injecting cash into the money markets.

The Federal Reserve and the European Central Bank will work with their counterparts in Britain, Canada and Switzerland to tackle the liquidity crunch by auctioning credit at favourable rates and arranging swap agreements to satisfy European banks' demands for dollars.

It is understood the joint effort will make available more than $US100 billion ($A114 billion) this month. The US Federal Reserve is injecting $US40 billion; the Bank of England $US46.4 billion, the European Central Bank (ECB) $US20 billion, the Swiss National Bank $US4 billion and the Bank of Canada is providing $US3 billion.

The co-ordinated effort is designed to combat what analysts have described as the worst credit crisis on record that follows the collapse of America's sub-prime mortgage market.