The Federal Reserve, European Central Bank and central banks from the UK, Canada and Switzerland are to jointly help banks deal with the credit crunch.

They have each announced that they will provide billions in loans to banks in order to lower interest rates and ease the availability of credit.

The move was coordinated by the US Federal Reserve, which has already cut interest rates three times this year.

It is a sign that despite rate cuts, banks are nervous about credit risks.

“This coordinated set of actions is a response to pressures in inter-bank markets, which have increased in recent weeks, reflecting sentiment about the global financial sector,” a Bank of England spokesman told the BBC.

“The actions demonstrate that central banks are working together to try to forestall any prospective sharp tightening of credit conditions.”

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Posted: 12|12|07 at 5:06 pm. Filed under: News.