20-03-23, 02:25
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Re: Banking Crisis: Emergency Rescue of Credit Suisse/Banks Boost Flow of USD
Central Banks to Boost Flow of US Dollars Amid Market Unease
-Six central banks move to keep credit flowing worldwide after two big institutions collapsed.
UBS Agrees Emergency Rescue of Credit Suisse
-Troubled bank Credit Suisse has been rescued by its Swiss rival UBS in a government-backed deal.
TRT WORLD 20 MAR 2023
Central Banks to Boost Flow of US Dollars
Six central banks, including the Bank of England, announced they would boost the flow of US dollars through the global financial system.
On Sunday the struggling Credit Suisse was taken over by UBS in a Swiss government-backed deal.
The US dollar liquidity "swap line" arrangement will run from Monday.
In a statement the Bank of England, Bank of Japan, Bank of Canada, the European Central Bank, US Federal Reserve and Swiss National Bank launched the co-ordinated action to "enhance the provision of liquidity".
The announcement said it served as an "important backstop to ease strains in global funding markets" and to lessen the impact on the supply of credit to households and businesses.
Instead of borrowing on the open market, British banks will be able to go direct to the Bank of England, and it will borrow from the US Federal Reserve.
It will work in the same way for banks in the eurozone, Canada, Japan, Switzerland and the US.
Banks will be able to access this funding on a daily basis.
The arrangement, adopted during the 2008 financial crisis and the Covid pandemic, will start on Monday and continue until "at least through the end of April", the Bank of England said.
A Banking Crisis -
Global banking stocks slumped following the collapse of Silicon Valley Bank, despite reassurances from President Joe Biden the US would do "whatever is needed" to protect the banking system.
Since SVB's collapse, the smaller Signature Bank also fell by the wayside and First Republic needed rescuing.
UBS Agrees Emergency Rescue of Credit Suisse
Axel Lehmann (L), Chairman Credit Suisse, speaks next to Colm Kelleher (R), Chairman UBS, during a press conference in Bern, Switzerland
The chairmen of both banks spoke at a news conference in Bern on Sunday
Sunday evening's announcement came after a weekend of emergency talks in Switzerland between the two banks and the country's financial regulators.
The Swiss National Bank said the deal was the best way to restore the confidence of financial markets and to manage risks to the economy.
The Bank of England said it welcomed the "comprehensive set of actions".
Credit Suisse shareholders were deprived of a vote on the deal and will receive one share in UBS for every 22.48 shares they own, valuing the bank at $3.15bn (£2.6bn).
At the close of business on Friday Credit Suisse was valued at around $8bn (£6.5bn).
But the deal has achieved what regulators set out to do - secure a result before the financial markets opened on Monday.
In a statement Switzerland's central bank said "a solution has been found to secure financial stability and protect the Swiss economy in this exceptional situation".
The federal government said in order to reduce any risks for UBS it would grant a guarantee against potential losses worth $9.6bn (£7.9bn)
The Swiss central bank has also offered liquidity assistance of up to $110bn (£90bn).
Global financial institutions were quick to praise the deal.
---Credit Suisse crisis is a blow to Swiss stability
The Bank of England said it welcomed the "comprehensive set of actions" set out by the Swiss authorities.
"We have been engaging closely with international counterparts throughout the preparations for today's announcements and will continue to support their implementation."
It said the UK banking system was "well capitalised and funded, and remains safe and sound".
The UK Treasury also said it welcomed the merger and the British government would continue to engage with the Financial Conduct Authority (FCA) and the Bank of England "as is usual".
The FCA said on Sunday it was "minded to approve" the takeover to support financial stability as both UBS and Credit Suisse have operations in London.
"The FCA continues to engage closely with UK and international regulatory partners to monitor market developments," the watchdog said.
Christine Lagarde, President of the European Central Bank, said she welcomed the "swift action" of the Swiss authorities.
"They are instrumental for restoring orderly market conditions and ensuring financial stability.
"The euro area banking sector is resilient, with strong capital and liquidity positions," Ms Lagarde said.
The comments from the European Central Bank President were echoed in the US.
Treasury Secretary Janet Yellen and Federal Reserve Board chairman Jerome Powell both said the announcement by the Swiss authorities supported "financial stability".
"The capital and liquidity positions of the US banking system are strong, and the US financial system is resilient", they said.
--- KEEP YOUR YOUR MONEY UNDER THE MATTRESS FOLKS !!!
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