Europe to receive billions of dollars from central banks
A two Euro coin rest on top of a Dollar note
Kai Ryssdal: On now to weird coincidence number two on this Lehman anniversary, which is that today of all days the world's leading central banks woke up and said to themselves, 'hey, maybe it's not such a good idea for Greece to go under.'
The U.S. Federal Reserve, the European Central Bank, the Bank of Japan and the central banks of England and Switzerland have decided to plow billions of U.S. dollars into the European banking system.
From London, Marketplace's Stephen Beard reports.
Stephen Beard: Remember the credit crunch, when the subprime crisis blew up and banks stopped lending to each other? It's what did for Lehman Brothers. Well, economist Andrew Hilton says the credit crunch is making a comeback -- in Europe.
Andrew Hilton: European banks are short of dollars. They would normally turn to their American counterparts to borrow dollars. And their American counterparts are suddenly not picking up the phone.
American banks are getting jumpy, wondering which European institutions will get hammered if Greece defaults.
European banks need dollars. It is the world's number one currency. Today's move will help. The world's top five central banks are offering huge dollar loans between now and the end of year.
Neil MacKinnon is with VTB Capital.
Neil MacKinnon: This will go some way to removing the threat of a Lehman-type crisis and potential volatility and instability in the eurozone banking system.
But banking analyst Peter Thal Larsen says it won't stop Greece, Portugal or Spain from defaulting, or some European banks from going bust.
Peter Thal Larsen: What we will have to find out over the next few months is whether these banks actually have enough capital to support the losses that may be coming down the track in the eurozone.
Investors liked the move -- European banks stocks soared. But the skeptics point out that the central banks have done this before -- after the Lehman collapse -- and it didn't stop the world lurching into recession.
In London, I'm Stephen Beard for Marketplace.