The U.S Federal Reserve and its companion, major central banks around the world again Monday took actions to keep financial markets liquid amid a credit crunch that has made private banks reluctant to lend critical, short-term funds to each other, and that threatens to slow global growth to a crawl.

The Fed said it increased the size of its dollar swap arrangements to $620 billion from the previously-announced $290 billion. The Fed also increased the size of its liquidity auctions and announced two forward auctions to provide funding over the year-end period.

"These steps are being undertaken to mitigate pressures evident in the term funding markets in the United States and abroad," the Fed said.

"By committing to provide a very large quantity of term funding, the Fed actions should reassure financial market participants that financing will be available against good collateral, lessening concerns about funding and rollover risk," the Fed said.

The nine banks participating in the swap lines are: the European Central Bank, Bank of England, Bank of Japan, Bank of Canada, National Bank of Denmark, Bank of Norway, Reserve Bank of Australia, Bank of Sweden, and the Swiss National Bank.

Economist backs Fed's moves

Economist Richard Felson applauded the Fed's move, given "the unchartered waters the Fed is in, and the political pressure it faces."

"It's liquidity front-and-center, while simultaneously determining with the [U.S.] Treasury which institutions have to be saved, which it can let the private sector dissolve, and at the same time begin the process of buying distressed debt," Felson said. "One goal is lowering the LIBOR spread, and this should help."

Libor-OIS rose 219 basis points Monday, Felson said, "a clear sign banks remain reluctant to lend to each other."