European Central Bank Announce Further Aid To Lenders
The European Central Bank has today announced further measures to help redress the credit shortage in Eurozone lending.
The package unveiled today, totalling an additional 48 billion euros, is designed to add to last week’s 95 billion euro pledge to banks and lenders across the thirteen Eurozone countries.
Analysts had forecast dire consequences arising from a global credit shortage, including an indication that a global recession may be the result of an international credit crunch.
After ongoing reverberations from the US sub-prime lending market, and further warnings of a looming credit crunch, the European Central Bank’s decision to offer further support to finance sectors comes on a day in which both Japan and the US have also agreed further intervention was necessary to prevent a global credit crisis.
Markets across the world were hit badly towards the end of last week after the European Central Bank took the initiative and was the first central monetary authority to propose a remedial package to help struggling banks and mortgage lenders maintain liquidity.
However, today’s move has been taken as more of a reassurance for markets, which closed strongly up on last week’s figures after reinvigorated investors took to buying up bargain-priced shares.
Only last month, the Governor of the Bank of England Mervyn King expressed his view that the US sub-prime lending market had not yet caused a global crisis.
After last week’s widespread credit crunch paranoia, it appears that the true effect of the sub-prime situation may be closer to global catastrophe than the Bank of England had at first envisaged.
While the additional support is welcomed, many analysts fear that the continuing problem in the US mortgage lending market will haunt banks across the world until a suitable resolution is found for the long term.
Discussion Area - Leave a Comment
You must be logged in to post a comment.