Word: interbank
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...Friday. The first was that the meeting of the G-7 - whose finance ministers and central bankers were set to convene in Washington - would unveil details of a plan to inject capital into banks worldwide. The second was that the G-7 would commit to a coordinated guarantee of interbank lending...
...into banks as needed (Britain has already committed to doing so), but they didn't announce amounts or timing. It was hardly the explicit, "show us the money" announcement many investors hoped for. Similarly, the G-7 pledged to unfreeze credit markets but didn't say how or mention interbank guarantees...
...Light trading volume in Hong Kong suggests that investors are holding back ahead of Wall Street's reaction to bailout plans. During an Oct. 10 meeting of G-7 finance ministers, European central bankers suggested they would follow Britain's lead by buying stakes in struggling banks and underwriting interbank loans. The U.S. Federal Reserve is also finalizing a plan to recapitalize the nation's bank in order to loosen frozen credit markets...
...Despite interest-rate cuts last week in the U.S., Europe and Asia, businesses throughout the world are finding it nearly impossible to borrow and money-market rates remain abnormally high. In Hong Kong, for example, the one-month interbank offered rate, the benchmark for short-term bank lending, rose to 5% last week even as the city cut its policy rate from 3.5% to 2.5%. Banks remain leery of lending in the face of further financial-industry failures...
...focuses on inflation. Nouriel Roubini, an economics professor at New York University and one of the few who predicted the extent of the current crisis, called yesterday for "at least 150 basis points (1.5 percentage points) on average globally." Roubini also backed the idea of deposit guarantees, guaranteeing interbank lending and other measures. "At this point, anything short of these radical and coordinated actions may lead to a market crash, a global systemic financial meltdown, and to a global depression...