The move by the BOJ is a proactive step following similar actions by central banks in the United States, Britain, Canada, Mexico, Brazil, Iceland and other countries that have offered temporary liquidity support to financial institutions.

The central bank did not say how much money it was prepared to lend but made it clear that the move was in response to international developments.

"The facility is strictly intended to provide liquidity to these institutions for overseas margins and repo payments on Government of Jamaica global bonds during this period of dysfunctional money markets," the BOJ said.

According to the bank, the temporary lending facility was designed to alleviate any short-term liquidity needs of domestic financial institutions and ensure the stability of Government of Jamaica global bond prices.

In addition, the BOJ said the loan facility would minimise pressures in the domestic and foreign-exchange markets.

There was no indication from the central bank as to the interest rate to be attached to the loans, but market sources said the rate was expected to be in line with the United States three- and six-month instruments, plus a small mark-up.

"The bank will continue to closely monitor the financial system and take appropriate action," the BOJ said.

The BOJ has received positive feedback for its initiative, which ease the pressure on the Jamaican dollar that has depreciated by approximately three per cent since the start of the world-wide meltdown.

BOJ temporary lending facility objectives:

1) Alleviate any short-term US dollar liquidity needs of domestic financial institutions.

2) Ensure the stability of Government of Jamaica global bond prices.

3) Minimise pressures in the domestic foreign-exchange market.