Eurozone Crisis Growing More Dire by the Day
BOE Governor Mervyn King today pointed out that the central banker's actions yesterday were not merely a form of easing, akin to lowering interest rates for example, but indeed were an effort to buy time - mere days - for the governments in Europe to arrive at a viable solution, lest the Eurozone - if not the whole world - is thrown into another economic death spiral.
Bloomberg
King Urges Banks to Bolster Defenses as Euro-Area ‘Systemic Crisis’ Looms
Bank of England Governor Mervyn King urged banks to enhance efforts to bolster their defenses against the euro area’s debt turmoil, which now looks like a “systemic crisis.”
“An erosion of confidence, lower asset prices and tighter credit conditions are further damaging the prospects for economic activity and will affect the ability of companies, households and governments to repay their debts,” threatening banks’ balance sheets, King told reporters in London today. “This spiral is characteristic of a systemic crisis...
King said the central bank measure was “designed to deal with clear evidence that there were problems in banks around the world finding difficulty in accessing dollar funding in particular.” Still, he added it can only provide “temporary relief” and is not a “solution to the underlying problems.”
He also said that said resolving the wider problems of global financial imbalances are beyond the U.K. authorities to deal with on their own and “only the governments directly involved can find a way out of this crisis,” referring to the euro-area debt turmoil.
“The crisis in the euro area is one of solvency and not liquidity,” he said...
Bloomberg
King Urges Banks to Bolster Defenses as Euro-Area ‘Systemic Crisis’ Looms
Bank of England Governor Mervyn King urged banks to enhance efforts to bolster their defenses against the euro area’s debt turmoil, which now looks like a “systemic crisis.”
“An erosion of confidence, lower asset prices and tighter credit conditions are further damaging the prospects for economic activity and will affect the ability of companies, households and governments to repay their debts,” threatening banks’ balance sheets, King told reporters in London today. “This spiral is characteristic of a systemic crisis...
King said the central bank measure was “designed to deal with clear evidence that there were problems in banks around the world finding difficulty in accessing dollar funding in particular.” Still, he added it can only provide “temporary relief” and is not a “solution to the underlying problems.”
He also said that said resolving the wider problems of global financial imbalances are beyond the U.K. authorities to deal with on their own and “only the governments directly involved can find a way out of this crisis,” referring to the euro-area debt turmoil.
“The crisis in the euro area is one of solvency and not liquidity,” he said...