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ECB joins central banks to bolster global finance

The Local · 30 Nov 2011, 15:03

Published: 30 Nov 2011 15:03 GMT+01:00

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The central banks of the eurozone, Canada, Britain, Japan, United States and Switzerland said in a joint statement they were lowering the cost of providing dollars to banks, pushing stocks in Europe and the euro sharply higher.

The central banks said they were engaging in "coordinated actions to enhance their capacity to provide liquidity support to the global financial system."

"The purpose of these actions is to ease strains in financial markets and thereby mitigate the effects of such strains on the supply of credit to households and businesses and so help foster economic activity," they added.

The arrangement allows the central banks to lend dollars to commercial banks that might be finding it hard to borrow them directly from other banks and is aimed at easing tensions in the crucial interbank lending market.

The banks said they were not only reducing the cost of this operation, but also extending it until February 1, 2013. They also agreed to allow cash swap arrangements in any of the participating countries' currencies if market conditions require them.

"At present, there is no need to offer liquidity in non-domestic currencies other than the US dollar, but the central banks judge it prudent to make the necessary arrangements so that liquidity support operations could be put into place quickly should the need arise," it said.

Such dollar operations were used to ease a credit crunch during the financial crisis of 2008-2009 and resumed in September in response to a dollar shortage among eurozone banks hit by the debt crisis.

European stocks surged on the news, with the German equity market up more than four percent, Spain and Italy more than three percent and France over four percent.

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This "will probably help banks to get necessary liquidity to run their domestic operations in a smooth way," an Italian trader told Dow Jones Newswires.

The euro also bounced sharply on the foreign exchange markets.


The Local (news@thelocal.de)

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Your comments about this article

17:46 November 30, 2011 by coffejohn
The US take on this is that they are saving Europe by making dollars available, dollars we cannot get access to on our own.
07:29 December 1, 2011 by luckylongshot
The core problem is that the level of total debt is too high. This has reached the point where even governments cannot afford to pay the interest. For the ECB to be creating even more debt in the naive belief that this will do anything more than delay the problem is irrational.

As all these central banks seem too be controlled by the Rothschild family it is more likely what we are seeing is part of plan to create a single world currency and effectively enslave everyone in the west. Get ready to protest!!!
17:23 December 4, 2011 by storymann
Yes, all that is true. Margret Thatcher once said "Socialism is a great for of Gov. until you run out of other peoples money." she could have included a socialistic form of capitalism in the USA also. There is no simple solution. Greed will always be with us, and the haves will always dupe the have nots.

Many heralded the coming of Globalization as a cure, but as time has proved it has only exasperated it's failures for the average consumer while making the rich richer and the world more corrupt.

Lincoln said "you can fool some of the people some of the time but not all the people all the time."

I hope we are seeing the beginning of a rebellion against the powerful and corrupt businesses and their supporting politicians.
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