The Bank of England broke its silence on the growing credit crisis for the first time yesterday by reassuring markets that banks could borrow from its unlimited credit facility if they need to increase liquidity.

Yesterday’s statement was the first from the Bank since stock markets across the globe began plummeting last week. It reminded traders that it stands ready to provide theoretically unlimited levels of liquidity, but not, as the European Central Bank has done, at the same price as its ordinary lending rate, currently 5.75 per cent.

In an announcement posted on its website, the Bank said: “The Bank’s standing facilities have been and continue to be available every day throughout the day to all participating banks, against eligible collateral and at a penalty rate of interest.”

Despite tightening credit conditions that have caused a wordwide liquidity squeeze, no banks have yet made use of the Bank of England’s credit facility since mid-July. The Bank charges financial institutions one percentage point above the Bank Rate to access its facility, as part of a system for operating in the money markets introduced last year.

The framework does allow for the Bank to inject liquidity at the base rate if it believes it necessary. But the Bank is anxious not to be seen as the first port of call when liquidity dries up.

Meanwhile, the European Central Bank (ECB) put a further €48 billion (£32 billion) into the credit markets to maintain liquidity. “The ECB notes that money market conditions are normalising and that the supply of aggregate liquidity is ample,” it said. The ECB added that it was prepared to add extra funds at its regular weekly tender to help to even out markets.

It was the third time since Thursday that the ECB had intervened to prevent a credit crunch, bringing the total value of cash that the central bank has injected into the money markets to €203 billion. Central bankers have been attempting since Thursday to avert a credit crunch after bankers, nervous about defaults related to the US sub-prime mortgage market, refused to risk lending to one another.

The New York Fed, which carries out the Federal Reserve’s market operation, also topped up its market with $2 billion in extra cash on Monday. That was far less than banks requested and way below the $38 billion injected on Friday, the largest amount for any single day since 2001. The Bank of Canada followed suit and reduced its injection, adding C$670 million (£316 million), down from C$1.685 billion on Friday. The Bank of Japan made a second cash injection, this time of 6 billion yen (£2.5 billion).

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