The Fed set up a new tool, the Term Securities Lending Facility, to lend treasuries to primary dealers for 28-day periods, through weekly auctions. The Fed also said in a statement in Washington that it’s increasing the amount of dollars available to European central banks through swap lines.

Tuesday’s steps are latest in Chairman Ben S. Bernanke’s effort to alleviate increasing strains in financial markets that are curtailing credit to homeowners and companies, even after the Fed lowered its main interest rate by 2.25 percentage points.

The Fed last week said it will make up to $200 billion available to banks through other tools to help boost liquidity. The measures announced by the Fed are part of a coordinated effort with other central banks, including the Bank of England, Bank of Canada, European Central Bank and Swiss National Bank.

International effort

The Federal Open Market Committee authorised increasing currency swap lines with the European Central Bank and Swiss National Bank to $30 billion and $6 billion, respectively, increasing the ECB’s line by $10 billion and the Swiss line by $2 billion. The Fed extended the swaps through Sept. 30.

European bail out

The ECB announced it will lend banks in Europe up to $15 billion for 28 days and SNB announced a similar auction of up to $6 billion.

The Bank of England will offer $20 billion of three-month loans on March 18 and hold a further auction on April 15. The Bank of Canada announced plans to purchase $4 billion of securities for 28 days.

The Fed’s auctions of Treasuries, which will begin March 27, may be secured by collateral including agency and private residential mortgage-backed securities, the Fed said. The central bank “will consult with primary dealers on technical design features” of the new tool.

Primary dealers are a group of 20 banks and securities firms that trade Treasuries directly with the Federal Reserve Bank of New York.