Global financial authorities launched an audacious package of measures in the early hours of Monday morning – including -720bn of government-backed loan guarantees and a commitment to buy European sovereign bonds – to combat rising financial market tensions triggered by worldwide fears over public finances.
Global financial authorities launched an audacious package of measures in the early hours of Monday morning – including €720bn of government-backed loan guarantees and a commitment to buy European sovereign bonds – to combat rising financial market tensions triggered by worldwide fears over public finances.
As part of a co-ordinated response to the growing uncertainty sparked by the Greek debt crisis, the European Central Bank announced it would intervene in government bond markets and join the US Federal Reserve and other main central banks in reactivating extra US dollar liquidity facilities.
The emergency funding facility agreed between the European Union and the International Monetary Fund was worth as much as €720bn ($930bn, £625bn) in loan guarantees and credits to stabilise the eurozone.
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The stabilisation scheme agreed by EU finance ministers and top officials after 12 hours of talks in Brussels consists of government-backed loan guarantees and bilateral loans worth up to €440bn ($568bn) provided by eurozone members; a further €60bn supported by all EU members through expansion of an existing balance of payments facility; and up to €220bn provided by the IMF.
Initial reaction to news of the package in Asia trading on Monday morning was favourable, with the euro gaining almost 2 per cent against the US dollar and 3 per cent against the yen. In Japan, the Nikkei average rose 1.3 per cent and Hong Kong’s Hang Seng advanced 1.2 per cent to 20,154.07. European markets were also expected to open strongly on Monday.
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