Central Banks May Act Together To Halt Crisis

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A number of the G20 nations have signaled that their central banks will do what is necessary to keep credit markets liquid so that capital is available to keep the global money system from gridlock–the kind it suffered four years ago. The announcement of the plans may be enough to prevent a panic about the amiability of capital. And, that could relieve most of the pressure that the euro-zone crisis has put on capital markets.

 

The immediate cause for the central bank announcements is the upcoming elections in Greece. It is not clear if anti-austerity parties win, that a possible departure of the country from the euro-zone would be viewed as a disaster. But, central banks have readied plans nonetheless.

Douglas A. McIntyre