Author (Person) | Fleming, Stewart |
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Series Title | European Voice |
Series Details | 20.09.07 |
Publication Date | 20/09/2007 |
Content Type | News |
Central bank officials, including EU represent-atives, are scheduled to meet in London today (20 September) and tomorrow for what is being described as their first formal effort to try to understand the forces which have triggered the international credit crunch in the money markets and assess the longer term implications of the turmoil. The meeting of the Basel Committee on Banking Supervision’s policy development group, the body which prepares meetings for the committee itself, comes amid evidence that the international credit crisis could rumble on for months and is likely to have a far-reaching impact on the global economy and the international banking system. Already this week (17 September) the Bank of England had to abandon its stance that troubled banks should only be provided with support at a penalty rate when the UK Treasury announced that it would not permit depositors in the troubled Northern Rock bank to suffer losses. The move implicitly provided a state guarantee to depositors in the banking system as a whole. The crisis is also reigniting the debate about financial market supervision and regulation amid charges that regulatory failures have contributed to the disarray. At the informal Ecofin meeting in Porto last weekend, Joaquín Almunia, the economic and monetary affairs commissioner, indicated again that he did not expect the financial market crisis to have a significant negative impact on EU growth this year. But EU economic policymakers are carefully evading specific forecasts for 2008, partly because of the uncertainty and partly because they suspect that a combination of a US economy which could face a recession and the tightening of global credit markets is likely to hit growth. On Tuesday, the US central bank, the Federal Reserve Board, cut its policy interest rate in the face of the rapid deterioration in US economic prospects. The European Central Bank is insisting that eurozone monetary policy is still "accommodative" and inflation threats remain. But it is certain to come under increased pressure to cut rates too, especially if the dollar weakens and the euro continues to rise. Charlie McCreevy, the internal market commissioner, broke ranks to say publicly that he believed that the decline in the dollar has been inevitable because of the need to correct the US current account deficit. A rising euro would put pressure on European exports, he said. He warned that an economic slowdown was likely in part because of the financial market turmoil and the weakening US growth. Central bank officials, including EU represent-atives, are scheduled to meet in London today (20 September) and tomorrow for what is being described as their first formal effort to try to understand the forces which have triggered the international credit crunch in the money markets and assess the longer term implications of the turmoil. |
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Source Link | http://www.europeanvoice.com |
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