a b s t r a c tIn this paper we show the existence of a group acting infinitesimally transitively on the moduli space of pointed-curves and vector bundles (with formal trivialization data) and whose Lie algebra is an algebra of differential operators. The central extension of this Lie algebra induced by the determinant bundle on the Sato Grassmannian is precisely a semidirect product of a Kac-Moody algebra and the Virasoro algebra. As an application of this geometric approach, we give a local Mumford-type formula in terms of the cocycle associated with this central extension. Finally, using the original Mumford formula we show that this local formula is an infinitesimal version of a general relation in the Picard group of the moduli of vector bundles on a family of curves (without any formal trivialization).