It is a weekend of danger on the horizon for the international money
markets. The reason is Greece, and the election there. It may see a
government elected that wants to scrap the bailout, and then l point the
pistol of default at the markets over its mammoth debt.
Well,
the central banks have guns of their own and they are preparing
coordinated action should the eurozone lurch deeper into crisis on
Monday.
Five of the world's biggest central banks, the ECB, Bank
of England, Bank of Japan, Bank of Canada, and the US Federal Reserve
will act together to stabilise the markets. If Greece should exit the
euro, the EU could be facing a trillion euro bill.
"The European
Central Bank has the crucial role of providing liquidity to sound bank
counterparties in return for adequate collateral. This is what we have
done throughout the crisis, faithful to our mandate of maintaining price
stability over the medium term. And this is what we will continue to
do. The Eurosystem will continue to supply liquidity to solvent banks
where needed," said the ECB boss Mario Draghi.
The Institute of
International Finance, which suggested the trillion-euro pricetag for a
Greek exit from the euro now says that is an old figure and the cost
would likely be higher, and in any case "unmanageable". It warns anyone
contemplating a Greek exit should "think again".
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