Will the US financial crisis grow to engulf foreign central banks?
*Financial Times, by Francesco Guerrera, Krishna Guha and Greg Farrell, September 15, 2008:
Wall Street Crisis Deepens
"Wall Street was in turmoil on Monday after Lehman Brothers filed for
bankruptcy protection and Merrill Lynch agreed a $50bn takeover by Bank
of America.
Confidence in financial institutions around the world was shaken as
central banks introduced a series of emergency measures to ease the
crisis in the global financial system.
Equity markets fell heavily and debt spreads widened as banks,
investment managers and insurance companies came under heavy selling
pressure.
BofA’s bold bid for Merrill came as the world’s top banks abandoned
efforts to save Lehman and set out to build a firewall against further
financial chaos with a $70bn liquidity pool to support other vulnerable
institutions.
The moves capped a weekend of high drama that could lead to one of the
most radical reshapings in Wall Street history.
The Federal Reserve said it was making it easier for financial
institutions to access Fed liquidity by easing terms on its borrowing
facilities and accepting a much wider range of assets as collateral.
The Fed meets to decide on interest rates on Tuesday.
It widened the set of assets eligible as collateral for loans of
Treasuries to include all investment grade paper, and raised the size
of these Treasury loans to $200bn."
*This information is solely a highlight of the opinion of a third-party publication and is incomplete. Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.
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