Arab Today, arab today central banks take a new actions
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Central banks take a new actions

Arab Today, arab today

Arab Today, arab today Central banks take a new actions

Christine Lagarde
Brussels - Arabstoday

Christine Lagarde Five central banks have acted to offer three-month US dollar loans to mainly European commercial banks in order to prevent money markets from freezing up because of the continent\'s sovereign debt crisis.
The European Central Bank (ECB) said  Thursday that it would hold three fixed-rate operations between October and December to offer banks as many dollars as they needed, in order to ease any funding crunch in the year-end period.
The ECB said it was acting in co-ordination with the US Federal Reserve, the Bank of England, the Bank of Japan and the Swiss National Bank.
The announcement sharply boosted the euro and European bank shares, with France\'s BNP Paribas jumping as much as 22 per cent.
Asian markets were up in early trade on Friday on the back of the news as well, with Tokyo\'s Nikkei-225 up 2.04 per cent and Hong Kong\'s Hang Seng up 2.14 per cent at 04:35 GMT.
Jean-Claude Trichet, the ECB\'s chief, said in a speech on Poland on Thursday that the move demonstrated the \"common goals\" and cooperation that central banks can have on a global scale. He said these banks \"are more than ever a pillar of stability and confidence\".
European finance ministers are meeting in Wroclaw, Poland, on Friday to discuss the European debt crisis and their governments\' response to it. Timothy Geithner, the US treasury secretary, will also address them, after a rare invitation was extended to the member of the US cabinet.
In Brussels, Olli Rehn, the EU economic affairs commissioner, meanwhile, said that while the 17-country single currency zone\'s economic growth was due to grind to a \"virtual standstill\" in the second half of 2011, the zone would avoid another recession.
\"The outlook for the European economy has deteriorated,\" Rehn told a news conference while releasing an interim economic report. \"We are expecting a stalling of economic growth but not a recession.\"
The growth forecast for 2011 remains at 1.6 per cent, according to the report, but it will slow to 0.2 per cent in the third quarter, and 0.1 per cent in the final three months of the year.
\"The sovereign debt crisis has worsened, and the financial market turmoil is set to dampen the real economy,\" Rehn said.
\'Dangerous\' new phase
The ECB\'s move to make funds available came as Christine Lagarde, the managing director of the International Monetary Fund (IMF), warned of a \"dangerous\" new economic phase during a speech in Washington.
Lagarde said \"uncertainty hovers over sovereigns across the advanced economies, banks in Europe, and households in the United States, without collective, bold, action, there is a real risk that the major economies slip back instead of moving forward\".
She said that \"political dysfunction\" and indecision were increasing the risk of major economies falling back into recession.
Some European banks have struggled to obtain dollar funding in recent months as lenders have become increasingly nervous about the eurozone debt crisis and the global economic slowdown.
Central banks carried out similar action to boost the liquidity of commercial lenders at the height of the financial crisis in 2008.
Greece concerns
During her speech in Washington, Lagarde also termed a statement issued after a summit between Greek Prime Minister George Papandreou, French President Nicolas Sarkozy and German Chancellor Angela Merkel \"a clear indication from them ... that the future of Greece is in the eurozone\".
She said the statement following the summit \"echoes\" commitments made by eurozone members on July 21 to continue to support Greece in the face of fears that it may default on hundreds of billions of euros in sovereign debt.
The IMF is taking part in last year\'s $151 billion (110 billion euro) bailout of Greece, but is still examining whether the country is complying with conditions before releasing a new tranche of funds.
It has not yet committed to adding any funds to a second-round bailout proposed in July by the ECB, the European Union and private banking institutions.

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