updated 10/28/2008 6:51:26 PM ET 2008-10-28T22:51:26

The Federal Reserve announced Tuesday that it will supply New Zealand’s central bank with up to $15 billion, part of an ongoing effort by the Fed to break through a global credit clog.

Under the new “swap” arrangement, the Fed will provide dollars to the Reserve Bank of New Zealand in exchange for that country’s currency. “This facility, like those already established with other central banks, is designed to help improve liquidity conditions in global financial markets,” the Fed explained in a brief statement.

The goal is to spur banks and other financial institutions to lend more freely, something that will help the U.S. and global economies.

The Fed has set up similar arrangements with the European Central Bank and with central banks in other countries, including Australia, Canada, and Japan.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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