Canada

Central Banks Make Swappin' Out Your Euro Cheaper

The headlines proclaim the DOW is up 400 points! Yippie, hurrah! But why?

In the middle of the night, the Federal Reserve moved to make it cheaper to swap Euros for dollars, in a coordinated move with Switzerland, Canada, England, the European Central Bank and Japan.

From the Federal Reserve press release:

The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank are today announcing coordinated actions to enhance their capacity to provide liquidity support to the global financial system.

This is supposed to stem a global liquidity crunch. In other words, to prop up the Euro's value.

These central banks have agreed to lower the pricing on the existing temporary U.S. dollar liquidity swap arrangements by 50 basis points so that the new rate will be the U.S. dollar overnight index swap (OIS) rate plus 50 basis points. This pricing will be applied to all operations conducted from December 5, 2011. The authorization of these swap arrangements has been extended to February 1, 2013. In addition, the Bank of England, the Bank of Japan, the European Central Bank, and the Swiss National Bank will continue to offer three-month tenders until further notice.

More interesting the Central banks are offering swaps in multi-currency denominations:

North Pole Stand-off

Canada, Russia, Denmark, Norway and the United States are squaring off over 1.2 million square kilometers (460,000 square miles) of Arctic seabed, thought to hold 25 percent of the world's undiscovered oil and gas. Experts estimate the ridge has ten billion tons of gas and oil deposits and significant sources of diamonds, gold, tin, manganese, nickel, lead and platinum.