The U.S. Federal Reserve joined with other central banks today to extend its temporary lending program to provide more liquidity to global financial markets by increasing the funds it will make available and broadening the collateral it will accept beyond the highest rated mortgages.

The Fed will lend up to US$200 billion of Treasury securities for 28 days to primary dealers in the bond market.

The new term securities lending facility will accept as collateral many kinds of mortgage-backed securities, including federal agency debt, Fannie Mae and Freddie Mac (agency) residential-mortgage-backed securities, and AAA-rated private-label residential mortgage-backed securities. Securities that are not highly rated are not accepted at the Fed.

The auctions will be held weekly.

The Fed also extended its currency swap arrangements with the European Central Bank and the Swiss National Bank through September 30.

The Bank of England, the Bank of Canada, the ECB and the Swiss National Bank also announced efforts to provide more liquidity.

The Bank of Canada will auction $4 billion in 28-day repurchase agreements over the next month.

The Bank of England said it would extend its 10 billion pound lending program. The ECB said it would offer US$15 billion in loans. The Swiss will offer US$6 billion.