Fed puts extra $30bn into markets

The availability of credit has shrunk

The US Federal Reserve is making $30bn (£16.1bn) available to central banks in Australia, Denmark, Sweden and Norway, to ease money markets.

The Fed said the aim was to "improve liquidity" globally, at a time when the availability of credit is limited.

The Fed made a similar move with central banks in the UK, Canada, Japan and the European Central Bank last week, making $180bn available.

The Federal Reserve said it would take "further steps" if necessary.

Commercial banks in each country can access the $30bn in the form of loans to increase short-term funding requirements.

The central banks in Australia and Sweden will have access to $10bn and Denmark and Norway will have $5bn each.

Central banks worldwide have been taking initiatives to boost the availability of funds, following a credit crunch that hit finance firms last summer.

With the emergence of the sub-prime crisis and a huge rise in defaults on loans, banks have been increasingly reluctant to lend to each other.

This in turn has made it harder for businesses and individuals to gain access to credit.

The central banks involved in the latest currency swap deal involve the Reserve Bank of Australia, Sweden's Riksbank, Denmark's Nationalbank and Norway's Norges Bank.