La ECB announced that it has agreed together with Bank of Canada, Bank of England, Bank of Japan, Federal Reserve and National Bank of Switzerland "coordinated actions" to improve their respective capacities to ensure liquidity to the financial system.
The goal is "ease market tensions and thus mitigate the restrictions on the supply of credit to businesses and households”. All of this, explains a statement released by the ECB, aims to support economic activity. As the news spread stock exchanges have taken flight: Milan gains 4,19%, London 2,90%, Paris 3,86% and Frankfurt 4,58%.
In detail, some have been agreed common terms on dollar refinancing that will be disbursed in the respective systems. The central institutions have also prepared currency exchange mechanisms with which, possibly, they will be able to provide liquidity in any currency. This would be a preventive move because, at the moment, "it does not appear necessary to offer refinancing in other currencies than the dollar".
The initiative finds a precedent in what happened on October 8, 2008, when, after the bankruptcy of Lehman Brothers, the institutions reacted with a coordinated maneuver. In that case, however, a cut in interest rates was also envisaged, which today would be almost impossible. Banks like the Fed and the Boe already have minimum rates, close to zero.
BEIJING GIVES A HAND TO THE BAGS
REQUIRED RESERVE REQUIREMENTS OF CHINESE BANKS REDUCED
After a weak start, European stock exchanges quickly recover their positions thanks to Beijing The Chinese central bank has in fact surprisingly reduced the compulsory reserves of credit institutions. Frankfurt gains 1,69%, Milan 1,38% (FTSE/Mib index) to 14.828, Paris 1,58%. More shy London. Beijing's decision, which will result in greater circulation of liquidity to support the economy, has also brought positive results on Wall Street futures: now contracts on the Dow Jones mark +0,3%, those on the Nasdaq. Situation still tense on the government bond market where the yield on ten-year BTPs continues to rise, reaching 7,24% (+6 basis points) just now. The spread with the German Bund remains at 500 points.
The finance ministers of the Eurogroup, Jean Claude Juncker said, are seriously evaluating the option of helping Italy and Spain, using the central bank's money to "turnover" to the International Monetary Fund, even if only as loans of last resort. The prohibition for the ECB to directly finance the governments of EU member countries would be circumvented by using the IMF channel as a vector.
Games in decline, the banks have regained share: Intesa rises by 2,77%, Ubi +1,84%, Unicredit +2,07%, substantial increases for PopMilano +4,69% and Banco Popolare +3,4% after asset transactions.
The rise of Azimut +3,5% continues today. Among the blue chips of Piazza Affari, only Fondiaria-Sai rises +1,2% after the rumors about the forthcoming sale of so far strategic shareholdings. Generali gains 0,77%. Turnaround in the morning also for Atlantia which rises by 0,55% and Telecom Italia +1,48% %. The Telecom Italia Media share +13,48% was suspended on the upside following rumors about an interest by Tarak Ben Ammar: the Franco-Tunisian financier denied the rumours.
Finmeccanica, on the eve of the board of directors, records a perfect parity. Fiat +1,17, Fiat Industrial +1,84% and Pirelli +1,04% are recovering. Luxottica gains 1,71% after the acquisition in Brazil. Among the blue chips, the only stock that remains in the red is Stm -0,80%. Seat fell 11,1% after the board's decision last night not to pay the coupon on Lighthouse bonds. The Board of Directors has decided to extend the deadline for accepting the restructuring agreements until 14 December.
