Financial Global Panic – Is It Imminent?

  • Sumo

World Central Banks Act to Prop-up Global Economy

Swiss Bank

Swiss Bank

The global economy received a boost last week as the world’s major central banks acted jointly, trying to prevent a debt crisis in Europe from exploding into a global panic.

bank-of-england

bank-of-england

The coordinated action by European Central Bank, the US Federal Reserve, the Bank of England and the Central Banks of Canada, Japan and Switzerland is to prop up the world financial system by making it easier for banks to borrow US dollars.

Loans made in US dollars are important because dollar is the No. 1 currency for international trade. Under the agreement, the central banks are reducing — by about 0.6% — the rate they charge banks for short-term dollar loans. The lower rate is designed to get credit flowing again.

Federal Reserve,European Central Bank

Federal Reserve,European Central Bank

This action represents the most extraordinary coordinated effort by the central banks since they cut interest rates together in October 2008, at the depths of the financial crisis.

The central banks, in a joint statement, notes that the purpose of the actions taken are to ease strains in financial markets and mitigate the effects of such strains on the supply of credit to help foster economic activity. We believe the coordinated action should ease borrowing for banks. European leaders gather next week for a summit on the debt crisis.

Bank of Canada

Bank of Canada

what is your opinion as regards this global panic? your comments are welcome .

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