Give them credit (nobody panic)
”Central banks are not supposed to be tightening credit when markets are in complete disarray,” said John Richards, head of Asia-Pacific Strategy at RBS Securities.
”And this is close to a complete disarray.”
The Bank of Japan and the Reserve Bank of Australia followed the European Central Bank and the US Federal Reserve by pumping additional funds into markets amid a global rush to cash and other liquid assets.
[…]
The European Central Bank on Thursday injected a record $130.6bn into the money markets amid a drying up of funds in Europe’s interbank market. Central banks in the US, Japan and Australia added more than usual amounts into their banking systems, while Singapore and South Korea said they stood ready to inject additional liquidity if needed.
[source-http://www.ft.com/cms/s/c7fa9470-46e6-11dc-a3be-0000779fd2ac.html]
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The European Central Bank was forced today to wade into the eurozone’s money markets and inject €94.8 billion of funds to stabilise overnight interest rates after a new bout of credit jitters saw these spike upwards. In a highly unusual move, the ECB stepped in to offer banks immediate and unlimited access to short-term cash at its main 4 per cent lending rate after overnight money market interest rates suddenly leapt to 4.7 per cent, their highest since October 2001, in the turbulent aftermath of September 11 terrorist attacks on the US.
[..]
In what looked like a transatlantic show of unity to help calm markets the US Federal Reserve quickly followed the ECB’s lead and also announced that it was adding extra liquidity to short-term money markets. The Fed said that it would provide $12 billion of temporary reserves to the American banking system through 14-day security repurchase agreements. That was more than double the $5 billion of temporary reserves added through such “repo” agreements last Thursday
[source-http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article2229381.ece]
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The Bank of Canada and other central banks around the world pumped billions of dollars into the financial system Thursday in a bid to calm jittery investors and ease concerns about a looming credit crunch that battered North American stock markets. In an unusual step, the Bank of Canada said Thursday it will “provide liquidity to support the stability of the Canadian financial system and the continued functioning of financial markets.”
By mid afternoon, the central bank had made more than $1.6 billion available to Canadian banks at its regular interest rate, far more than its recent cash infusions into the financial system. Such a public reassurance is rare - the last time it happened in Canada was following the Sept. 11 terror attacks in New York and Washington. But it shows how worried regulators have become over the credit crunch that is raising interest rates and making it tougher to borrow in financial markets.
[source-http://www.reuters.com/article/marketsNews/idINL1017953720070810?rpc=44]
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KUALA LUMPUR (Thomson Financial) - Major central banks in Asia took action Friday to contain the fallout from the credit crisis in the US, following in the footsteps of their European and US counterparts by pumping an unusually large amount of funds into the banking system to help shaken lenders. The Bank of Japan pumped one trillion yen into the local money markets Friday as overnight rates shot up amid fears of shrinking liquidity.
‘We offered one trillion yen … as we judged it would be better to offer (ample) funds,’ a spokesman for the central bank said.
[source-http://www.abcmoney.co.uk/news/102007116972.htm]
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Aug. 9 (Bloomberg) — U.S. stocks tumbled as subprime mortgage contagion and hedge fund losses halted a three-day rally and sent brokerage shares to their worst rout since 2002. “The fear is feeding on itself,” said Jeffrey Kleintop, who helps oversee more than $173 billion as chief market strategist at LPL Financial Services in Boston. “It’s what you don’t know that seems to be taking over the market.”
[source-http://www.bloomberg.com/apps/news?pid=20601087&sid=aWb_q3eNZ9dA&refer=home]
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HONG KONG/SINGAPORE (Reuters) - Central banks from Tokyo to Sydney injected extra cash into banking systems or pledged to do so on Friday, as Asia joined a global campaign by monetary authorities to calm panicky credit markets. The Bank of Japan and the Reserve Bank of Australia added more money than usual to prevent short-term rates from spiking, albeit on a much smaller scale than the European Central Bank’s record 94.8 billion euro ($130.6 billion) injection on Thursday.
“What the central banks are doing is a concerted effort to inject liquidity. And the worrying thing is that they do that when the system is not functioning the way it should,” said Jimmy Koh, a currency strategist at United Overseas Bank.
[source-http://www.washingtonpost.com/wp-dyn/content/article/2007/08/10/AR2007081000379.html]
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Markets have faltered in Friday trading a day after markets in the US and Europe suffered heavy losses amid fears of a global credit crunch. By the close of trade in Japan, the Nikkei share index was down 406.5 points, or 2.4%, at 16,764.1. Japan’s central bank followed the European Central Bank in pumping money into the market to boost liquidity.
[source-http://news.bbc.co.uk/1/hi/business/6939757.stm]
