In a move reminiscent of the dramatic Sunday night moves to stabilize financial markets in 2008, the European Union announced a 720 billion-euro bailout package, including EUR220 billion from the International Monetary Fund, while the Federal Reserve and other central banks it will re-establish currency swaps to provide vital liquidity to bank funding markets.
Economic and Monetary Affairs Commissioner Olli Rehn declared the authorities will defend the euro “whatever it takes.” But after an initial blip, the euro was pulling back from the $1.29 level in Asia.
The European Central Bank also reportedly is planning to purchase European sovereign debt to boost liquidity in a way analogous to the Fed’s massive, $1.75 trillion securities purchase program. The added liquidity from the ECB would mean a lower euro, so Rehn’s comment was directed at those who doubted the survival of the common currency, not at defending a particular exchange rate.
In any case, the moves are giving a lift to Asian stocks in early trading after the steep losses in recent sessions. What else would be expected when authorities are preparing to throw over $900 billion at the European crisis?
No comments:
Post a Comment