WASHINGTON -- The Federal Reserve, trying to calm financial turmoil on Wall Street, announced Friday that it will pump as much money as needed into the U.S. financial system to help overcome the ill effects of a spreading credit crunch.

The Fed, in a short statement, said it will provide "reserves as necessary" to help the markets safely make their way. The central bank did not provide details but said it would do all it can to "facilitate the orderly functioning of financial markets."

Financial markets in the United States and around the globe have been shaken by fears about spreading credit problems that started with home mortgages to those with tarnished credit histories. Investors are worried that these problems will infect the larger financial system and possibly hurt the U.S. economy.

The Fed's action didn't appear to ease investors' worries Friday, with the markets dropping sharply again in early trading.

The current financial turmoil provides the biggest test yet to Federal Chairman Ben Bernanke, who took the helm last year.

The Fed's action comes one day after a financial panic about a credit crunch swept through Europe. That prompted the Europeans to pump $130 billion into their financial system. The Fed moved Thursday to add an extra $24 billion in temporary reserves to the U.S. banking system. But that wasn't enough to comfort Wall Street, which suffered its second-worst decline of the year Thursday.

The Fed chose not to cut a key interest rate, called the federal funds rate, to address the problem. That interest rate still stands at 5.25 percent. The funds rate is interest banks charge each other on overnight loans and is the Fed's main lever to influence economic activity.

Instead, the Fed is seeking to provide reassurance to investors that the central bank will plow extra money into the U.S. financial system to make sure the credit crunch doesn't worsen.

On Friday, the Federal Reserve Bank of New York, which carries out the central bank's market operation, moved to add $19 billion in temporary reserves.

"In current circumstances, depository institutions may experience unusual funding needs because of dislocations in money and credit markets," the Federal Reserve in Washington said in its statement.

It told banks that the Fed's discount window -- where banks can turn in an emergency for short-term loans -- is available as a source of funding.

After the Sept. 11, 2001, terror attacks, the Fed used the discount window to extend billions of dollars worth of emergency loans to banks to keep the financial system functioning.