The world's central banks continued to pump new cash into the global economy on Wednesday as governments desperately tried to keep the ailing financial system in North America and other industrialized regions afloat.

The Bank of Japan became the latest to join the money-lending parade, extending more than $28 billion US in new cash for companies.

The Japanese central bank is eyeing firms, mainly in the financial services sector, that either have huge losses from owning faulty debt or have invested in firms that have this type of nearly worthless asset on their income sheets.

The Bank of Japan has made an additional $28.4 billion US available on global credit markets. (Katsumi Kasahara/Associated Press)

Already this week, the global financial system has been rocked by the bankruptcy of U.S. investment bank Lehman Brothers, the buyout of Merrill Lynch & Co. by the Bank of America and Tuesday's breathtaking takeover of insurer American International Group Inc. by the U.S. Federal Reserve.

In response to the turmoil, central banks began injecting huge amounts of cash into the world financial system in an effort to make sure that firms needing monetary resources to stay afloat could actually find some.

"While the first-round effect from Lehman's failure on the economy and the financial markets is limited in Japan, the risk of the larger-than-expected second-round effect through a global recession and global financial turmoil is growing," said Masaaki Kanno, chief economist at JP Morgan Securities in Tokyo.

The Bank of Japan was not alone in extending a financial helping hand on Wednesday.

The Bank of Russia also made more money, in this case $44.9 billion worth of rubles, available for Russian banks and financial companies that are facing a tougher time accessing cash to fund their operations.

So far, the Bank of England, which printed new money to the tune of $35.6 billion on Tuesday, said it was not planning to make yet another similar move Wednesday.

But already this week, the British central bank, the U.S. Federal Reserve, the European Central Bank and the Swiss central bank, among others, have injected close to $400 billion into the global financial system.

The Bank of Canada and other government banks have relaxed the type of security that borrowers can use as collateral, another way of extending credit.

No bailout

The central banks' cash is not bailout money but is instead a way to ensure that firms have access to a pool of available funding.

Right now, ailing corporations such as AIG and the largest U.S. savings-and-loan company , Washington Mutual Inc., need such large amounts of money to recapitalize their balance statements that other, more investment-grade institutions have trouble finding money for their own needs.

Add to this problem the tendency for lenders to be wary of making credit available in an economic slowdown, and you have a classic borrowing crunch.

As a sign of the global cash squeeze, central banks are seeing furious bidding when they put short-term loans up for auction, one method by which they extend credit to the marketplace.

For example, on Tuesday, Russia's government bank saw a record amount of cash, $14 billion, snapped up by private companies.