By Jane Wardell | AP | Jan. 27, 2010 

The Bank of England said Wednesday that it and other major central banks are ending emergency lending arrangements put in place with the U.S. Federal Reserve in the wake of the global credit crisis, citing improvements in financial markets.

The decision marks the first unified retraction by central banks around the world of extraordinary support measures to boost lending after credit markets seized up in late 2007, causing the global economic downturn.

The Bank of England was joined by the European Central Bank, the Bank of Japan and the Swiss National Bank in announcing that the temporary reciprocal currency arrangements with the Fed would expire on Feb. 1.

"These lines, which were established to counter pressures in global funding markets, are no longer needed given the improvements in financial market functioning seen over the past year," the bank said in a statement. "Central banks will continue to cooperate as needed."

The Fed announced in December 2007 that it had authorized so-called liquidity swap lines with the European Central Bank and the Swiss National Bank. The agreement was extended to include several other central banks in April 2009.

Under the arrangements, central banks around the world provided each other with foreign currency -- the Fed made U.S. dollar liquidity available elsewhere, with the ECB providing euros and the Bank of England providing sterling. The agreements added up to hundreds of billions of dollars.

The aim was to improve liquidity conditions in U.S. and foreign financial markets after banks became nervous of lending to each other amid concerns about the state of balance sheets across the industry.

The stagnation in the interbank lending pushed up the premium for short-term U.S. dollar funding in particular, a currency that features widely in both asset and liability tables of banks and companies around the world. That led to a sharp rise in interbank lending rates, which flowed through to the rest of the financial system.

The Bank of England said it conducted its last U.S. dollar repo operation under the arrangements on Wednesday.