Danger Everywhere; Western Banks  

Oleh:

[s.n]

Jenis: Article from Bulletin/Magazine
Dalam koleksi: The Economist (http://search.proquest.com/) vol. 400 no. 8754 (Oct. 2011), page 79-80.
Topik: Economic Crisis; Banking Industry; Default; Foreign Investment; Asset Management

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Perpustakaan Pusat (Semanggi) Nomor Panggil: EE29.68 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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"This brutal lack of confidence" is how the chief executive of one of Europe's biggest banks describes the situation facing his firm and its peers. The catalogue of troubles afflicting the institution (call it Bank X, so as not to punish it for its candour) shows how worrying the outlook has become for big banks, and hence for the real economy. A bank-funding crisis that started on Europe's periphery with worries over Greek, Irish and Spanish banks has now infected the core of the West's financial system. The governments of France and Belgium said this week they would stand behind the debts of Dexia, a perennially troubled lender, while also engineering a break-up of the bank. Across the Atlantic shares in American banks whipsawed on worries about a Greek default and rumours of policy breakthroughs. For Bank X, the most pressing issue is a freezing of funding markets as investors ponder the potential impact of losses that banks may take on their holdings of euro-zone government bonds. American money-market funds have almost completely withdrawn dollar funding from European banks over the past few months. This is forcing them to sell dollar assets. Some of these transactions will do no harm to the sellers: there are buyers at reasonable prices. But Bank X is also cutting traditional banking activities denominated in dollars. Some of these include critical functions such as trade finance. A bigger worry is a freeze in euro funding.

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