Six central banks, including the US Federal Reserve and the European Central Bank, have announced a coordinated effort to boost the flow of US dollars with the aim of keeping credit flowing, as fears about the health of the global financial system spread despite the rescue of embattled Swiss banking giant Credit Suisse.

In a statement late on Sunday, the US Federal Reserve said the central banks’ coordinated action would enhance the provision of liquidity via the standing US dollar liquidity swap line arrangements. To improve the swap lines’ effectiveness, the central banks currently offering US dollar operations have agreed to increase the frequency of 7-day maturity operations from weekly to daily. These daily operations will continue at least through the end of April.

The network of swap lines among the six central banks serves as an important liquidity backstop to ease strains in global funding markets, thereby helping to mitigate the effects of such strains on the supply of credit to households and businesses, the Fed said.

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The six central banks, which include the Bank of England, the Bank of Japan, the Bank of Canada and the Swiss National Bank, announced the measures just hours after UBS, Switzerland’s biggest lender, agreed to a $3.25 billion all-share acquisition of its troubled rival Credit Suisse.

Credit Suisse was the biggest name ensnared in the global market turmoil unleashed by the collapse of US lenders Silicon Valley Bank and Signature Bank last week. While the 167-year-old Swiss bank has been plagued by a series of missteps and compliance failures in recent years, its stock crashed after its largest investor—the Saudi National Bank—said it could not provide more financial assistance because of regulatory constraints.

UBS’s purchase of the second-largest Swiss bank was brokered by the country’s authorities, who were looking to expedite the deal over fears of a ‘contagion’ risk stemming from the possible failure of Credit Suisse. The parties had been locked in discussion since Wednesday, when Credit Suisse secured a 50 billion Swiss francs ($54 billion) lifeline from the central bank.

Signature Bank sale

Flagstar Bank, a subsidiary of New York Community Bancorp, has agreed to acquire 40 branches of Signature Bank in a $2.7 billion deal, the US Federal Deposit Insurance Corp. announced late on Sunday.
The deal includes $38.4 billion in Signature Bank’s assets, a little more than a third of the total when the bank failed a week ago, according to an AP report. $60 billion in Signature Bank’s loans will remain in receivership and be sold off in time, the FDIC said.