Credit Suisse announced it will borrow up to $54 billion from the Swiss central bank to boost liquidity and restore investor confidence, following a decline in its stock price that raised concerns about a worldwide banking crisis.

This announcement came after volatile trading sessions in Europe and the US, where investors expressed worries about possible runs on global bank deposits. Credit Suisse's announcement helped mitigate the steep sell-off in financial markets during Thursday morning's trading in Asia.

Credit Suisse announced early on Thursday that it would exercise its option to borrow up to 50 billion Swiss francs ($54 billion) from the central bank. This came after Wednesday's assurances from Swiss authorities that Credit Suisse complied with "the capital and liquidity requirements imposed on systemically important banks" and could, at any time, access liquidity from the central bank.

Since the financial crisis of 2008, Credit Suisse is the first significant international bank to receive an emergency lifeline. As a result of this, there are now serious concerns about whether central banks will be able to continue their aggressive interest rate hike campaign to combat inflation.

Thursday's decline in Wall Street stocks was followed by a rise in gold, bonds, and the dollar among investors. Even though the bank's announcement helped to reduce some of those losses, sentiment and trade were unstable.

"It is helpful. It eliminates a present risk. But it presents us with an additional option. What will it be? As we continue to do this and blunt monetary policy, we will have to put up with higher inflation," "said Damien Boey, head of the equity strategy at Sydney's Barrenjoey.

"Do bailouts improve the situation?" On the one hand, you are removing a risk factor for the markets that face an immediate threat. On the other hand, we are contributing to the paradigm that monetary policy is self-defeating."

The borrowing by Credit Suisse will be done through a covered loan facility and a short-term liquidity facility, both of which are completely collateralized by high-quality assets. Additionally, it disclosed offers for senior debt securities worth up to 3 billion Swiss francs in cash.

The bank stated that "this additional liquidity would support Credit Suisse's core businesses and clients" as it took the necessary steps to transform into a more straightforward and client-centered institution.

Earlier on Wednesday, Ulrich Koerner, the chief executive of Credit Suisse, tried to reassure investors about the lender's strong liquidity.

Koerner told the media, "Our capital, our liquidity basis, is very, very strong." "We essentially meet and exceed all regulatory requirements."

As a result of Credit Suisse's issues, attention has shifted from the United States to Europe, where its largest investor claimed that regulatory restrictions prevented it from providing additional financial support.

This has exacerbated concerns in the banking industry that were already present after Silicon Valley Bank (SVB) and Signature Bank collapsed last week. Investors are paying close attention to any steps taken by central banks and other regulators to regain public trust in the banking system as well as any potential exposure that businesses may have to Credit Suisse. To discuss the demise of SVB, Australian Treasurer Jim Chalmers called a meeting of the main regulators and the central bank.

This week, global bank stocks experienced a wild ride due to the failure of SVB and Signature Bank, as investors feared a repeat of the Lehman Brothers crisis. Banks now have access to more funding thanks to U.S. Vice President Joe Biden and emergency measures, but Credit Suisse shares led a 7% decline in the European banking index and five-year credit default swaps reached a new high.

The U.S. Treasury is keeping an eye on the situation and in touch with international counterparts, and the European Central Bank has contacted banks under its watch to assess their exposure to Credit Suisse.

Rapid increases in interest rates have made it more difficult for businesses to repay or service loans, increasing the likelihood that lenders will suffer losses.

Traders are currently wagering that the Federal Reserve may pause its interest rate hike campaign, while wagers on a significant European Central Bank interest rate hike have vanished. A 50 basis point rate increase at the ECB meeting is less likely than a 20% increase, according to money market pricing.

The uncertainty brought on by SVB's demise has also led depositors to look for new places to put their money.

Christian Sewing, CEO of Deutsche Bank, stated that the German lender has also seen incoming deposits. Ralph Hammers, CEO of Credit Suisse rival UBS, stated that market turmoil has steered more money his way.