Access To Dollar Is Not A Permanent Solution For The Debt Crisis Of Europe
On Thursday, five central banks made a decision and revealed that it will be making efforts to shore up the confidence of the financial system of Europe by providing its banks better access to the United States dollars.
The move will help the banks of Europe to get more time to keep huge quantity of debt issued by Greece, accompanied by other European countries that happen to be in the same state as Greece. Few of these European banks have faced problems in paying for its day-today operations since other banks denied giving them more money.
However, under the action that was concluded and reached upon by the five central banks, these trouble stricken banks can take unlimited quantities of dollars for a time period of three months. The borrowing limit has increased from the existing one-week limit.
ECB said that it will work with the Federal Reserve of the United States of America, the Bank of Japan, Swiss National Bank and the Bank of England in order to provide loans till the year ends. The move of these five major bodies to render more dollars is quite alike the measures taken during the global financial crisis that took place in 2008, and again in the previous year, 2010.
The news however did one good thing immediately; it gave reassurance to stock markets, which have been largely effected by the debt crisis and the debt crisis engulfing other nations in it. But when the news came, a lot of the stocks all across the globe, from Asia to United States of America went up. For instance, stock indexes in Germany and France both experienced a surging of 3.1%. Another impact of the news was the rise of euro versus other currencies.
