Fed extends deal to four more central banks

WASHINGTON (CNN) -- The Federal Reserve Bank announced a deal with four nations Wednesday meant to help global financial markets.

The Fed said it has established reciprocal-currency arrangements with the central banks of Australia, Denmark, Norway and Sweden.

The agreement should make up to $30 billion available to the Fed so it can make loans to banks in the United States. The central banks of Australia and Sweden will provide $10 billion each while institutions in Denmark and Norway will supply $5 billion each.

The Fed's announcement, made at 1 a.m. ET (5 a.m. GMT) Wednesday, follows a similar initiative it unveiled last Thursday -- a $247 billion reciprocal currency arrangement with the European Central Bank, Swiss National Bank, Bank of England, Bank of Canada and the Bank of Japan.

The influx of money from the central banks represents an effort to put more money into financial markets and fuel economic activity.

In the current economic climate, with major financial and insurance institutions teetering, commercial banks have tightened their lending policies and increased interest rates, taking billions of dollars out of the economy.

"We're very grateful that the rescue package has been put on the table, because frankly the world's inter-bank markets are just simply not working in the manner that they should do," David Buik of the BGC Partners brokerage firm in London said last week. "There's a wholesale mistrust ... amongst everybody."

Under the plan announced last Thursday, the European Central Bank will kick in up to $110 billion, the Swiss National Bank up to $27 billion, the Bank of Japan up to $60 billion, the Bank of England up to $40 billion and up to $10 billion from the Bank of Canada.

"It is essential that the central banks do stand there and massage the trust back into action," Buik said of the multi-billion dollar plan.

"Without them, we would be in unbelievably uncontrollable turmoil."

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