EU Says More LiquidityBy Reuters - | Posted 2008-10-16 Email Print
U.S. banks reported losses and other companies painted a negative outlook for the U.S. economy as EU government leaders led by French President Nicolas Sarkozy vowed to shield EU industries from the global crisis. Sarkozy intends to meet with President George Bush this weekend to push for an international overhaul solution.
The European Central Bank said it would provide up to 5 billion euros ($6.8 billion) to Hungary to pump up liquidity.
And the International Monetary Fund was in talks to find ways to help Ukraine's economy.
The rates banks charge each other for loans mostly fell on Thursday in response to radical moves by central banks to provide liquidity, shore up banks and loosen credit lines to institutions needing cash.
The Bank of England said it would create two new facilities for banks to access funds beginning next week, which should remove the stigma that has become attached to using its emergency lending system.
The ECB will allow banks to swap a larger range of their assets for central bank funds and offer more funds across a range of currencies in a new salvo to combat the crisis.
But their actions mean commercial banks do not have to go to each other for cash.
"The only provider of liquidity now is the central bank," said Guillaume Baron, strategist at Societe Generale in Paris.
Governments around the world have pledged $3.2 trillion in emergency measures, including taking stakes in banks to help them stabilize.
EU CALL FOR ACTION
European leaders also gave their backing for an overhaul of the world's financial system, which was set up in Bretton Woods, New Hampshire, in 1944.
France, Germany and Britain on Wednesday called for leaders of the Group of Eight major industrialized countries to gather next month with the heads of emerging economies to discuss the 64-year-old financial architecture.
In the banking industry, UBS said it would receive a capital injection of 6 billion Swiss francs ($5.3 billion) from the government and would unload up to $60 billion of illiquid securities and other assets from its balance sheet to a separate fund entity under an agreement with the Swiss National Bank.
Credit Suisse, which announced a third-quarter net loss of about 1.3 billion Swiss francs, with 2.4 billion francs of fresh write-downs, said it would raise funds from investors including the Qatar Investment Authority, already a major shareholder.
Investors' overall focus, however, appeared to be shifting from the ravaged financial system to a declining world economy.
Underlining this, Germany on Thursday slashed its forecast for 2009 economic growth to 0.2 percent from 1.2 percent, citing the global financial crisis.
In Japan, meanwhile, a Reuters poll showed manufacturing business sentiment hit a six-year low this month.
(Additional reporting by Reuters bureaus around the world; Editing by Brian Moss and Steve Orlofsky)
© Thomson Reuters 2008 All rights reserved
IT Solutions Builder TOP IT RESOURCES TO MOVE YOUR BUSINESS FORWARD
Which topic are you interested in?
What is your company size?
What is your job title?
What is your job function?
Searching our resource database to find your matches...