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France and Japan help banks, IMF prepares aid
(Agencies)
Updated: 2008-10-21 22:44 LONDON -- Japan and France offered a helping hand to their banks on Tuesday and the International Monetary Fund (IMF) prepared to intervene in financial trouble spots in several corners of the world.
Despite tentative signs investors were beginning to regain confidence, the IMF was poised to help Pakistan -- which said it needed up to $15 billion. Ukraine also said it was close to agreeing measures to allow it to receive aid. Paris last week earmarked 360 billion euros as part of an international effort to help banks survive the worst financial crisis since the Great Depression almost 80 years ago. In Japan, Economics Minister Kaoru Yosano said the country's big banks could get public funds if needed, as the government considered recasting a law aimed mainly at regional banks to up the flow of finance to credit-starved small firms. "I can't see any reason why big banks should be discriminated against," Yosano told a news conference. Analysts say major Japanese banks may not need the help having largely avoided risky credit products. Recession threatensGovernments around the world have already promised about $3.3 trillion to guarantee bank deposits and bank-to-bank lending and in some cases have taken stakes in struggling banks. Efforts are ongoing -- the Bank of England allocated $26 billion in an auction of unlimited one-month funds on Tuesday and the Saudi central bank poured $2-$3 billion into its banking system, its first direct injection of dollars in a decade. The United Arab Emirates Ministry said it had injected 25 billion dirhams ($6.81 billion) into banks to help lenders cope with the financial crisis. There are some signs the efforts are paying dividends. The interbank cost of borrowing dollars, euros and sterling fell across all maturities, with dollar overnight rates were fixed below the Federal Reserve's 1.5 percent target for its official federal funds rate. British bank Barclays Plc is close to issuing a 3-year note to raise at least 1 billion pounds, a further sign British government rescue plans are thawing funding markets. But the crisis will not conclusively be over until central bank and government support is removed and bank-to-bank lending -- frozen for much of the last year by uncertainty over which groups faced financial disaster -- is flowing freely again. In the meantime, the world teeters on the edge of recession. Euro zone economic growth will fall to just 0.2 percent next year with the bloc's biggest economy, Germany, stagnating, the IMF forecast on Tuesday. "Day by day, the evidence builds that we are facing a serious economic slowdown," European Commission President Jose Manuel Barroso told the European Parliament. |
