May 3, 2012
The largest central banks in the world make common cause and provide the banks beyond the end of time in dollars.
How do we get our money? This question Europe's banks increasingly unsettled recently. Now the major central banks intervene: Until the coming year, they provide the banks with large U.S. currency. The stock is pleased that, especially bank stocks make significant gains.
The largest central banks in the world make common cause and provide the banks beyond the end of time in dollars. The Council of the European Central Bank (ECB) decided in consultation with the U.S. Federal Reserve, the Bank of England, the Bank of Japan and the Swiss National Bank, across three businesses in U.S. dollars with a maturity of around three months of the year The stock climbed to carry out the announcement to the top. The euro rate jumped up and climbed to $ 1.3936.
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The Dax responded positively to the announcement by the central banks, in large-scale dollar on the market. At the close of trading, he was with gur three percent increase. (© DAPD)
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In October, November and December, the banks are able to supply at a fixed interest rate of the ECB with dollars. Thus the monetary authorities want to ensure the liquidity of the banks. European banks had fallen, it increasingly difficult to borrow money in the United States. Your local business partner, especially in U.S. funds, were hesitant lent money to Europe. Reason for the reluctance was the worry that European banks could be due to the euro debt crisis in trouble.
In recent weeks, the ECB had already provided twice banks with dollars. On Wednesday it approved a payment of 575 million dollars in two banks of the euro zone. Previously on 17 August $ 500 million went to an institution. He was the first time since February that the central bank had to apply this policy instrument.
Following the announcement by the monetary authorities rose sharply at the stock market. The German benchmark DAX put in the afternoon on the Frankfurt Stock Exchange by about three percent to just under 5500 points. The bank's shares experienced a renaissance. The price of Deutsche Bank rose by twelve percent in the meantime, even more than twelve percent were there at the BNP Paribas, nine percent at Commerzbank. The French banks Credit Agricole and Societe Generale gained more than six percent.
In contrast, the dispute went to the ECB's head to the purchase of government bonds continued merrily on Thursday. Board member Lorenzo Bini Smaghi defended the purchases, saying critics from their expertise. ECB chief economist Juergen Stark, who is said to have voted against these purchases went in the evening in a speech in Vienna is not explicitly on the purchases, but said only: ". The pooling of national debt is the completely wrong way"
The ECB began the government bond purchases in May 2010 during the Greek crisis, made a break and then took it up again this summer. She has since taken over government bonds worth 143 billion euros, mainly from Italy and finally Spain. They financed the purchases indirectly heavily indebted countries, and takes risks in its own balance sheet.
Highly susceptible to volatile bond markets
Bini Smaghi said the market for government bonds take a key role in the functioning of financial markets as a whole. The criticism of the purchases was the result of "lack of economic analysis and insufficient knowledge of the crisis in which we find ourselves." It applies to prevent a liquidity problem arises from a far-reaching solvency problem.
According to the ECB's Monthly Report was threatened in early August, a similar situation as after the bankruptcy of Lehman and why are the bond purchases were resumed. The volatility in the bond markets have even reached the level of May 2010 and exceeded the state after the collapse of Lehman.
In addition to the purchases of government bonds to justify the ECB are other risks that they took during the crisis. This includes above all the collateral that banks submit to the ECB in order to refinance. "An increase in the risk of a central bank is justified in times of financial stress, when the central bank would result from inaction potentially higher risk," say the ECB's economists.
The risks should be compared to the benefits that will accrue to society. The risks would be monitored and assessed on the financial buffer of the euro system. The collateral would be submitted by the banks based on market prices every day. Moreover, the ECB would make price reductions on the collateral.
by erectusplus at 3:49 AM |
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