The European Central Bank was to turn on the liquidity taps to banks yesterday, offering unlimited funds at a below-market fixed rate as market unease over the US subprime mortgage crisis continues.
The ECB said in a statement that during the two-week market refinancing operation (MRO) beginning yesterday it would allow banks to borrow an unlimited amount of funds and would keep the rate at 4.21 percent, below the 4.9 percent market rate for similar operations over the past few days.
"Specifically, as a minimum the ECB will satisfy all bids at or above the weighted average rate of the MRO settled on Dec. 12, ie 4.21 percent," the bank said.
Since the US market for high-risk loans collapsed in August, central banks have been boosting liquidity in the banking sector to ensure that banks continue to extend credit to businesses.
On Dec. 12 the European, US and Swiss central banks said they would provide more than US$60 billion to money markets over longer periods and under easier-than-usual conditions to calm the markets.
The Wall Street Journal reported that this would be only the second time in the ECB's nine-year history that it would offer an unlimited amount of funds at a fixed rate. The first time was on Aug. 9 when financial markets first seized up as the US subprime mortgage market melted down.
The ECB announced last week that it would exceptionally extend the MRO for two weeks.
In its announcement on Monday, the ECB told banks they can have a nearly unlimited amount of funds at the below-market level of 4.21 percent through the end of the year, a delicate time for financial institutions which need to close their accounting books.
For its part, the Fed began an operation on Monday to inject US$20 billion into the market. The results of that effort were to become known yesterday.
In another planned move, the Fed is expected to inject another US$40 billion into the market in the coming days.
Markets worldwide have become increasingly jittery over the credit squeeze, the losses it has caused and its implications for the wider economy.
Wall Street shares fell sharply on Monday in the wake of a sea of red on European and Asian bourses.
"Wall Street remains concerned over the possibility of more huge writeoffs from global financial companies and the ramification those write-offs could have on the banks' ability to finance the global economic expansion," said Fred Dickson, strategist at DA Davidson & Co.
MORE VISITORS: The Tourism Administration said that it is seeing positive prospects in its efforts to expand the tourism market in North America and Europe Taiwan has been ranked as the cheapest place in the world to travel to this year, based on a list recommended by NerdWallet. The San Francisco-based personal finance company said that Taiwan topped the list of 16 nations it chose for budget travelers because US tourists do not need visas and travelers can easily have a good meal for less than US$10. A bus ride in Taipei costs just under US$0.50, while subway rides start at US$0.60, the firm said, adding that public transportation in Taiwan is easy to navigate. The firm also called Taiwan a “food lover’s paradise,” citing inexpensive breakfast stalls
TRADE: A mandatory declaration of origin for manufactured goods bound for the US is to take effect on May 7 to block China from exploiting Taiwan’s trade channels All products manufactured in Taiwan and exported to the US must include a signed declaration of origin starting on May 7, the Bureau of Foreign Trade announced yesterday. US President Donald Trump on April 2 imposed a 32 percent tariff on imports from Taiwan, but one week later announced a 90-day pause on its implementation. However, a universal 10 percent tariff was immediately applied to most imports from around the world. On April 12, the Trump administration further exempted computers, smartphones and semiconductors from the new tariffs. In response, President William Lai’s (賴清德) administration has introduced a series of countermeasures to support affected
CROSS-STRAIT: The vast majority of Taiwanese support maintaining the ‘status quo,’ while concern is rising about Beijing’s influence operations More than eight out of 10 Taiwanese reject Beijing’s “one country, two systems” framework for cross-strait relations, according to a survey released by the Mainland Affairs Council (MAC) on Thursday. The MAC’s latest quarterly survey found that 84.4 percent of respondents opposed Beijing’s “one country, two systems” formula for handling cross-strait relations — a figure consistent with past polling. Over the past three years, opposition to the framework has remained high, ranging from a low of 83.6 percent in April 2023 to a peak of 89.6 percent in April last year. In the most recent poll, 82.5 percent also rejected China’s
PLUGGING HOLES: The amendments would bring the legislation in line with systems found in other countries such as Japan and the US, Legislator Chen Kuan-ting said Democratic Progressive Party (DPP) Legislator Chen Kuan-ting (陳冠廷) has proposed amending national security legislation amid a spate of espionage cases. Potential gaps in security vetting procedures for personnel with access to sensitive information prompted him to propose the amendments, which would introduce changes to Article 14 of the Classified National Security Information Protection Act (國家機密保護法), Chen said yesterday. The proposal, which aims to enhance interagency vetting procedures and reduce the risk of classified information leaks, would establish a comprehensive security clearance system in Taiwan, he said. The amendment would require character and loyalty checks for civil servants and intelligence personnel prior to
RSS