Federal Reserve and other top Central Banks of world started rescue operations to resuscitate lost market faith resulting from the debacle of US Financial giants, amid renewed fears about how the US economy would weather the storm. US government has already assured $85 billion bail out for the insurer AIG.
The US Federal Reserve also forked out an extra $180 billion to major central banks, which in turn could lend it to their local commercial banks to keep funds circulating in the financial system, to quell the lost faith in markets and eroding trust in banks.
Bank of England and European Central Bank also lent extra funds in the own currencies in the wake of another round of takeovers and mergers fueled by the news that Morgan Stanley is also looking for buyers.
Russia too poured money in its banking system and China said it would it would raise its equity stakes in state funded banks that have lost value in stock market meltdowns over the world.
Reacting for the first time to the global crisis, Indian Finance minister Mr.Chidambaram said that Indian financial institutions including banks are in sound financial health and there is no cause for anxiety. However he did not rule out credit crunch in the system but said the government was ready to pump in more money should the situation demand..