The US Federal Reserve led an unprecedented push by central banks to flood financial markets with dollars, backing up government efforts to restore confidence in the banking system.

The ECB, the Bank of England and the Swiss central bank will offer unlimited dollar funds in auctions with maturities of seven days, 28 days and 84 days at a fixed interest rate, the Washington-based Fed said yesterday. The Bank of Japan may introduce "similar measures". The dollar declined and some money-market rates fell.

Policymakers from the Group of Seven (G7) nations pledged at the weekend to take "all necessary steps" to stem a market panic after the MSCI World stock index plunged 20 percent last week. Central banks last week cut interest rates in tandem for the first time since 2001, the US plans to buy $700 billion in distressed assets from banks, and in Europe, the United Kingdom is leading a push to keep lenders afloat with taxpayers' money.