The world's six largest central banks have taken action to shore up the financial system amid fears over the ‘emergency rescue’ of Credit Suisse.

The troubled Swiss bank was yesterday rescued by its rival UBS in a Government-backed deal.

That came after a weekend of emergency talks between the two banks and the Swiss financial regulator.

In the hours since, the world’s largest central banks including the European Central Bank (ECB) have entered in a so-called ‘swap-line arrangement’ in a bid to keep credit flowing globally.

The ECNB said it remains ready to support eurozone banks with loans if needed after the Credit Suisse takeover.

They took the move to ease investor fears of another collapse like that of Lehman Brothers, the Wall Street giant whose failure sparked the global financial crisis in 2008.

The European Central Bank (ECB) is seen in Frankfurt, Germany in July 2017. Picture by: Noppasin Wongchum / Alamy Stock Photo

Switzerland's president, Alain Berset, said the situation with the bank had become extremely dangerous.

“The takeover of Credit Suisse by UBS is the best solution for restoring the confidence that has been lacking in financial markets recently and for best managing the risk to our county and its citizens,” he said.

The new swap line arrangement runs from today, with the Central Banks saying it will serve as an “important backstop to ease strains in global funding markets” and lessen the impact on the supply of credit to households and businesses.

Under the arrangement, European banks will be able to borrow direct from the ECB instead of borrowing on the open market.

The ECB in turn will borrow from the US Federal Reserve and will the other central banks involved in the deal.

Banks will be able to access the funding on a daily basis.

It is hoped that the arrangement will be enough to bolster market confidence over the health of other banks, particularly regional lenders in the US, which have seen their shares prices collapse in the wake of the failure of

Silicon Valley Bank, Palo Alto, Silicon Valley. Image: SiliconValleyStock / Alamy

(SVB) earlier this month.

However, stock markets across Asia have started the week in the red again while financial commentators have warned that Europe is also set to see further weakness.

Central banks in both Europe and the US have insisted their banking systems are strong and resilient.