Central banks in the US and Europe are pumping billions of dollars into the banking system in an attempt to avoid recession.
More than $60 million has been lost by the banks, with expectations that there is more to come. The depressed housing market in the US is causing nervousness, with fears it could drag the US into recession.
Concerns are also growing that the credit squeeze is putting pressure on banks worldwide, which in turn will limit the amount banks can lend.
It is the first time since 11 September 2001 that the banks have taken such coordinated action.
The plan led by the US Federal Reserve will inject more than $114 billion into the system.
The rescue plan, while welcomed by most economists, was criticised for not addressing the major problem – the ongoing impact of the US housing slump and the economic repercussions flowing from that.
The Australian Stock Market has continued to slide this morning despite gains on Wall St last night.
Mid morning the All Ordinaries had shed 19.2 points to 6641.9. By 1pm, it had fallen to 6594.7 while the midmorning benchmark S&P/ASX200 index was down 18.4 points at 6579.2, before falling further at 1pm to 6531.1