INSTANT VIEW: World central banks in coordinated action

LONDON/SINGAPORE (Reuters) - The world's leading central banks, including the Federal Reserve, offered on Thursday to pump billions of dollars into global money markets to ease a dollar funding crunch triggered by the upheaval on Wall Street.

The coordinated action also involved the European Central Bank, the Bank of Japan, the Bank of England, the Bank of Canada and the Swiss National Bank.

A series of announcements from the central banks had an immediate impact on overnight U.S. dollar quotes, which dropped sharply to 2.0 percent from rates of nearly 8 percent traded earlier on Thursday in Asia.

COMMENTARY

JOSEPH KRAFT, HEAD OF CAPITAL MARKETS JAPAN, DRESDNER

KLEINWORT, TOKYO

"The coordinated funding operation will be effective in helping to relieve negative sentiment in the market to some extent and is also a positive step in addressing the issue of dollar funding shortages.

"But it is not a fundamental solution to the broader financial problems, and does not ease worries weighing on market sentiment such as the issue of individual financial institutions and sharp declines in the stock markets."

HIROMICHI SHIRAKAWA, CHIEF ECONOMIST, CREDIT SUISSE, TOKYO

"The coordinated action was to prevent systemic risks in global financial markets. It would be wrong to assume just from recent developments that there will be a coordinated move by central banks on interest rate policy.

"While a provision of liquidity is based on a short-term assessment of the situation, interest rate policy is based on the economic outlook for the next year or so.

"A coordinated interest rate action is unlikely unless the central banks sharply cut their assessments for their respective economies for 2009."

THOMAS MAYER, DEUTSCHE BANK

"This is a global financial crisis so it is correct that we are seeing a global response. They will have to keep doing it (injecting funds)."

"Huge chunks of assets have become illiquid so banks are crowding the central banks."

"This is not just a little storm in a teacup. If a body dehydrates it falls over and if it gets worse it can die. Likewise the financial system is starved of liquidity right now so the central banks will have to keep providing it."