U.S. Federal Reserve funnels $30B into overseas money markets

The Federal Reserve, in co-ordinated action with foreign central banks, plowed $30 billion into money markets overseas Wednesday, part of an ongoing effort to fight a global credit crisis.

The Fed's action — taken at 1 a.m. ET — sets up temporary "swap" arrangements to supply dollars to the central banks of Australia, Denmark, Norway and Sweden in exchange for their currencies.

"These facilities, like those already in place with other central banks, are designed to improve liquidity conditions in global financial markets," the Fed said in a brief statement.

"Central banks continue to work together during this period of market stress and are prepared to take further steps as the need arises," the Fed added.

The new swap arrangements will provide up to $10 billion each to the central banks of Australia and Sweden and $5 billion apiece to the central banks of Denmark and Norway.

Last week, the Fed and other foreign central banks pumped as much as $180 billion US into money markets overseas. The European Central Bank, the Bank of Japan, the Bank of England, the Swiss National Bank and the Bank of Canada participated in that manoeuvre.

The global credit crisis poses a danger not only to the U.S. economy but also the world economy.

Finance officials from the world's major economic powers pledged this week to do all they can to provide relief.

The Group of Seven countries said they welcomed the extraordinary steps by the United States to stem the crisis, including a plan for the Treasury Department to buy $700 billion in bad mortgages and other toxic assets held by banks and other financial institution.

Those dodgy debts are at the heart of the crisis. Besides the United States, the Group of Seven is made up of Japan, Germany, France, Britain, Italy and Canada.