Stress across money markets intensified yesterday in spite of the unprecedented round of co-ordinated interest rate cuts by central banks aimed at helping banks gain access to funds.

In recent days, central banks have pumped vast amounts of liquidity into the short-term lending markets, only for banks to hoard the cash and not lend to other banks. As well as the rate cuts, the US Treasury tried to alleviate lending problems in government bond markets by making more of its bonds available for collateral.