Instant view: Coordinated global c.bank liquidity drive

Wed Nov 30, 2011 9:33am EST
 
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(Reuters) - The central banks of the United States, euro zone, Japan, Canada, Britain and Switzerland announced on Wednesday coordinated global action to provide liquidity to the financial system, lowering the price on existing dollar swaps.

Following are analysts' reactions to the decision.

MOHAMED EL-ERIAN, CO-CHIEF INVESTMENT OFFICER AT PIMCO

"This is a dramatic action, to reduce the price and increase the scope of emergency financing, is aimed at addressing growing dislocations in the functioning of financial markets and the increasing fragility of the banking system.

"Once again, the world's central banks are being forced to move aggressively to counter a crisis that has grown in scale and scope because of inadequate policy responses on the part of other agencies.

"As it is essentially a liquidity band aid, it is critical that this coordinated central bank action end up being a bridge to a more effective and holistic policy response."

NICK KOUNIS, HEAD OF MACRO RESEARCH AT ABN AMRO

"It's a positive step. I expect it to be followed by further steps to support the banking system. You will see next week at the ECB governing council meeting we will get fresh steps to make liquidity available for longer periods and possible more generous collateral requirements.

"However, I also think this is not a game changer for the debt crisis. It's relieving some strains but it's not meant to tackle the actual sources of these problems. There I think there is still quite a way to go on the policy ground. There needs to come a credible package.   Continued...