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ECB will do what it takes to restore confidence
(Agencies)
Updated: 2008-10-20 08:15 Digging Deep Globally Fears of the worst global slump since the 1930s have prompted some governments to change spending plans, others to dig deep to support the banking system, and many to advocate major reforms of the financial system. Countries such as Iceland, Ukraine and Pakistan have asked for aid to prop up their economies. Meanwhile, authorities in Seoul pledged $130 billion in state guarantees and capital injections. "The government has decided to join in global coordinated efforts to stabilize financial markets and we'll continue to provide preemptive, decisive and sufficient measures to this end," Finance Minister Kang Man-soo told reporters. Analysts welcomed the measures and looked for South Korea's central bank to trim interest rates as early as next month to prop up sagging domestic demand. The head of the International Monetary Fund, Dominique Strauss-Kahn, welcomed South Korea's move as a way of bringing the policies in Asia's fourth largest economy more in line with those in developed countries. In the Middle East, a newspaper said the United Arab Emirates would inject $19.06 billion into long-term bank deposits, and Oman's Chamber of Commerce and Industry called for a cash injection into banks for financing. Late on Sunday, the German government set strict conditions for banks planning to tap into its 500 billion euro rescue package, including limits on compensation packages for top managers, according to a draft of the law seen by Reuters. The draft foresees a recapitalization cap of 10 billion euros per bank and also sets a limit on the assumption of bank risks at 5 billion euros per bank. In Britain, finance minister Alistair Darling said the government would have to borrow more to fund public spending to generate growth and employment. "This is a time when you have to support the economy," he told the Sunday Telegraph. "We can allow borrowing to rise." Reforms on the Way US President George W. Bush said on Saturday he would host the first crisis summit soon after a November 4 presidential election, focused on the "principles of reform" needed to fix the financial system. Trichet on Sunday promised "no taboos" when policy-makers roll up their sleeves and get to work on reforms and officials from several countries started to weigh in with ideas. Japan, which chairs the Group of Eight, supported the summits, but its finance minister said they would be worthwhile only if they produced concrete results. "If a summit were to be held, it should come up with a strong action plan or a decision," Finance Minister Shoichi Nakagawa said on Sunday. Appearing in Quebec City, Canadian Prime Minister Steven Harper, said "national regulation alone" was insufficient to get to the root of the crisis and backed France's call for the creation of stronger international financial institutions. Central bank presidents from Latin America's top six economies also met on Sunday in Santiago and said the region was well-prepared to take on growing financial market tumult. |
