Central banks from major economies stand ready to take steps to stabilize financial markets by providing liquidity and preventing a credit squeeze if the outcome of Greek elections Sunday causes tumultuous trading, G-20 officials told Reuters. A senior U.S. official cautioned that the Greek election will not provide “the definitive signal on what happens next” in the eurozone debt crisis. But if severe market strains emerge after an unusual confluence of three elections this weekend – there are important polls in Egypt and France as well – central bankers are on standby to ensure enough cash is flowing through the financial system. “The central banks are preparing for coordinated action to provide liquidity,” said a senior G-20 aide familiar with discussions among international financial diplomats. Wall Street stocks jumped sharply on the news, with the S&P 500 and the Dow Industrials both up more than 1 percent. The euro added to gains and U.S. government debt prices fell, boosting yields. A move to boost liquidity could mark a dramatic backdrop to the G-20 summit of world leaders, who will gather in Los Cabos, Mexico, on Monday and Tuesday where Europe’s escalating crisis tops the agenda. Leaders will be accompanied by finance ministers playing an advisory role. The ministers, who tend to keep low profiles at these summits, have scheduled meetings on Monday Tuesday. Depending on the severity of the market response, an emergency meeting of ministers from the Group of Seven developed nations could be held Monday or Tuesday in Los Cabos, with central bankers joining by phone, a second G-20 official said. Their first line of defense would probably be a statement that policymakers are ready to take whatever steps are necessary to assure market stability. This usually is a signal for technical steps to keep cash flowing through the financial system. Currency swap lines already are in place, which can be drawn upon to ensure there are enough dollars available if global investors rush into the safety of U.S. assets. Central banks also can hold extra auctions to flood banks with short-term cash via repurchase agreements. Currency intervention also is possible, though less likely to be sanctioned by the G-7. Japan and Switzerland might intervene to weaken their currencies if a rush to safe-haven assets pushes up the yen and the Swiss franc. From the daily star.