7 Oct 2011

Central banks in new moves on debt crisis

1:26 pm on 7 October 2011

Two leading central banks have announced new measures to tackle the threat posed by the euro zone debt crisis and stalling economic growth.

The European Central Bank has announced €40 billion of emergency loans for eurozone banks to improve liquidity.

The announcement came as the ECB decided to keep interest rates on hold again at 1.5%.

The bank's move will help ensure European lenders do not run out of cash, the BBC reports.

The Bank of England is injecting more than £75 billion into the financial system through quantitative easing.

The Bank has already pumped £200 billion into the economy by buying assets such as government bonds, in an attempt to boost lending by commercial banks, the BBC says, and has held interest rates at the record low of 0.5%.

Quantitative easing effectively increases the supply of money by printing more.

European shares have risen to hit their highest close in five weeks after the central banks announced the new measures.

The main markets in London, Frankfurt and Paris rose more than 3%, while other European markets posted similar gains.