Bank of Japan pumps in cash as central banks move to calm markets

TOKYO, Aug 10, 2007 (AFP) – The Bank of Japan injected one trillion yen (8.5 billion dollars) into the financial system Friday, joining efforts by other global central banks to try to ward off a credit crunch. “They could move in September unless these credit market issues get bigger,” he added. Worries about problems in the US mortgage market have caused liquidity to dry up in money markets as private banks withhold funds, prompting the Japanese, US, Eurozone and other central banks to offer extra cash.

The European Central Bank Thursday pumped a record 94.8 billion euros (130.2 billion dollars) into the Eurozone money markets as lenders struggled for funds in a flight to safety from the growing defaults in US home loans.

The US Federal Reserve made a more modest 24 billion dollars available to US commercial banks on Thursday.

The BoJ “needed to stabilise money market interest rates,” said Hiromichi Shirakawa, chief economist at Credit Suisse in Tokyo.

“This increase in interest rates globally is reflecting the increasing credit risk of some financial institutions,” he said.

The BoJ’s injection is be no means unprecedented as it has pumped large sums of cash into the Japanese financia