SYDNEY, Nov 6 (Reuters) - Australia's central bank will begin to accept commercial paper as collateral for loans, the latest in a string of measures to add liquidity to money markets amid a global credit squeeze.
The Reserve Bank of Australia (RBA) said on Thursday the move was aimed at easing a logjam in the commercial paper (CP) market, where companies do much of their short-term borrowing.
The market has been all but shut in many countries around the world as investors shun all types of risk. The U.S. Federal Reserve has even taken the extraordinary step of buying CP directly, picking up over $40 billion a day on average.

The RBA is not going that far, rather it will accept commercial paper as collateral for loans in its daily money market operation. The central bank said it would accept Australian dollar commercial paper rated P-1 or equivalent, A$ asset-backed commercial paper (ABCP) rated P-1 or equivalent and Australian dollar debt securities rated AAA or equivalent, excluding highly structured products.
The RBA said the arrangement would remain in place until June 30, 2009, when it would be reconsidered.
For CP, and asset-backed securities, the RBA would charge a margin of 10 percent for loans. For other AAA-rated securities, the margin would vary from between 2 to 8 percent, depending on maturity.

(Reporting by Wayne Cole) Keywords: AUSTRALIA ECONOMY/CENBANK (wayne.cole@reuters.com ; +61 2 9373 1813; Reuters Messaging: wayne.cole.reuters.com@reuters.net )

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