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Banks inject extra cash to raise confidence


Banks inject extra cash to raise confidence


In a bid to contain the fall out from the crisis sweeping Wall Street’s biggest firms, central lending banks have pumped massive amounts of extra funds into financial global markets.

It is hoped the inject will ensure the smooth operation of the global financial system in the wake of the collapse of investment bank Lehman Brothers.

The European Central Bank which oversees monetary policy among the 15 countries which use the euro led the way with 100 billion euros. The US Federal Reserve, the Bank of England and Bank of Japan took similar action – the aim is to shore up confidence.

Finance expert, Howard Wheelan: “ We are entering into the final chapter, I think, of this credit market crisis. But the one factor we should all be very aware of is that credit will never again be the same as it was two years ago. Mortgages will be different. The availability of money will be based on your ability to pay.”

Britain’s Bank of England said the inject of cash was in response to conditions in the short term money markets. It follows yesterday’s inject which the bank said was over subscribed, another example that banks are hungry for cash.

Demand from banks for today’s extra funds was intense and analysts say it is a measure of how much other sources of liquidity are drying up. But even that move could not prevent a surge in the cost of borrowing between banks.

Now many pundits are now looking to the cost of borrowing on the high street and waiting for help there to ease the continuing credit crunch.

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