World economic leaders are telling the commercial banks to must lend more.
They say that is the best way to revive the economy which has been pitched into recession by the failure of the global financial system. World Bank President Robert Zoellick has sent a letter to the Group of Eight nations meeting this week in Italy. Zoellick said interventions by central banks and governments appeared to have “broken the fall in the global economy” but 2009 remains a dangerous year and “the pace of recovery in 2010 is far from certain.” Newly released figures reveal that overnight deposits with the European Central Bank have reached an all-time high. That shows that banks are choosing to hoard cash rather than risk lending it for such things as house mortgages and loans to buy cars and even commercial loans to companies. British Prime Minister Gordon Brown – en route to the G8 gathering – said he and other European leaders are worried. At a joint news conference with French President Nicolas Sarkozy, Brown said: “We have to increase bank lending, both of us are worried banks have yet to respond in full to the situation we have where industries are calling for help from the banks.”