Switzerland's central bank made two unusual cash injections totalling 3.14 billion Swiss francs (1.92 billion euros, 2.62 billion dollars) into international money markets last week, according to weekly data released Monday.
The Swiss National Bank provided overnight liquidity of 1.44 billion Swiss francs bilaterally on Thursday and 1.7 billion Swiss francs through auction on Friday, at higher interest rates than its usual longer term transactions last week.
The move came in the wake of the European Central Bank's decision to inject 95 billion euros and 61 billion euros into money markets on Thursday and Friday respectively, in order to avert the possibility of a credit crunch.
The crisis on financial markets stems from concerns that banks exposed to losses on US subprime, or high risk, home loans might have insufficient cash to continue normal lending, causing a credit crunch. The cash injections by the ECB, which enable commercial banks to borrow from the central bank to meet their liquidity needs, were designed to forestall a credit freeze linked to problems in the subprime market.
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