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TIME Asks Can the U.S. Federal Reserve Help Save Europe’s Banks?

Posted By admin On November 22, 2011 @ 9:18 am In Money Watch | Comments Disabled

MASSIMO CALABRESI
TIME [1]
November 22, 2011

The U.S. Federal Reserve has been pumping billions of dollars into the European banking system in recent weeks in an attempt to help stabilize the continent’s financial crisis. And while the effort remains small, it is likely to grow in coming days as Europe’s banks struggle to find lenders willing to help them service their dollar denominated debts.

The Fed’s effort has two parts. The largest by far is its provision of dollars through swap lines the Fed opened to other central banks around the world during the 2008 financial crisis, and reopened in May 2010 when the European sovereign debt crisis blew up. According to the agreement signed between the New York Fed and the European Central Bank, the ECB can swap Euros for dollars at a fixed exchange rate and repay the Fed with nominal interest at an agreed upon date.

For months the swap lines remained idle, but last September the European Central Bank announced it would tap them to help provide dollars to banks in Europe, and it began rolling over about $500 million worth of swaps every 7 days at a little over 1% annualized interest. In mid-October the ECB increased it’s swaps, drawing $1.35 billion for three months, while continuing to rollover the previous $500 million. Over the following weeks it swapped another $1 billion in 1-week and three-month paper, bringing the outstanding total to $2.35 billion as of Nov. 16. (Read “Is Europe’s Crisis a Glimpse of America’s Future?”) [2]

Full article here [1]


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URLs in this post:

[1] TIME: http://news.yahoo.com/u-federal-help-save-europes-banks-100000042.html

[2] (Read “Is Europe’s Crisis a Glimpse of America’s Future?”): http://us.lrd.yahoo.com/_ylt=AtF7ITlesjld0CA.UFBqvB5tzwcF;_ylu=X3oDMTFqMDgxZXM0BG1pdANBcnRpY2xlIEJvZHkEcG9zAzEEc2VjA01lZGlhQXJ0aWNsZUJvZHlBc3NlbWJseQ--;_ylg=X3oDMTJyNHMwc2xiBGludGwDdXMEbGFuZwNlbi11cwRwc3RhaWQDODdhMDUyNTMtM2M5Yy0zYjRhLTg1NGEtMTQ5MTkxN2QxZTA2BHBzdGNhdAN1cwRwdANzdG9yeXBhZ2UEdGVzdAM-;_ylv=0/SIG=1385t57r4/EXP=1323188254/**http%3A//moneyland.time.com/2011/11/14/is-europes-crisis-a-glimpse-of-americas-future/

[3] No One Telling Who Took $586B in Fed Swaps: http://www.prisonplanet.com/no-one-telling-who-took-586b-in-fed-swaps.html

[4] Federal Reserve Bleeds The Dollar To Keep Europe On Life Support For Another Week: http://www.prisonplanet.com/federal-reserve-bleeds-the-dollar-to-keep-europe-on-life-support-for-another-week.html

[5] Federal Reserve boosts flow of dollars to European Central Bank: http://www.prisonplanet.com/federal-reserve-boosts-flow-of-dollars-to-european-central-bank.html

[6] Everyone Knows that the Federal Reserve Banks Are PRIVATE … Except the American People: http://www.prisonplanet.com/everyone-knows-that-the-federal-reserve-banks-are-private-except-the-american-people.html

[7] The Federal Reserve ADMITS that Its 12 Banks Are PRIVATE – Not Government – Entities: http://www.prisonplanet.com/the-federal-reserve-admits-that-its-12-banks-are-private-not-government-entities.html

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