Darling welcomes central banks' action

LONDON - Chancellor Alistair Darling welcomed the coordinated move by central banks to combat the credit crunch, telling a newspaper on Thursday that the action was needed to send a clear signal to the world.

"This was both necessary and very welcome," he told the Guardian.

"It sends a very clear signal across the world that central banks stand ready to do whatever is necessary."

Darling said he had been in constant contact with the governor of the Bank of England, Mervyn King, in recent weeks in an effort to tackle the impact of frozen credit markets that have affected British bank Northern Rock and other lenders.

Darling's comments followed a move on Wednesday by central banks around the world to take coordinated action to boost liquidity, their first joint action since the September 11, 2001 attacks on the United States which paralysed U.S. markets.

The U.S. Federal Reserve, the European Central Bank and the central banks of Canada, England and Switzerland announced steps to make it easier for stressed banks to access cash in the hopes of quelling the knock-on impact of the credit crunch.

The Bank of Japan and Sweden's Riksbank also issued statement saying they were lending support to the plan.

The credit crunch, sparked by the sub-prime lending crisis in the United States, has led to conditions in which banks are reluctant to lend to one another, driving up the cost of overnight borrowing and tightening most financial market operations.

It is expected to have a deep impact on economic activity in the United States and elsewhere, with the U.S. economy forecast to slip into recession as a result, slowing growth worldwide.