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Time ripe for tougher banking rules
(China Daily)
Updated: 2008-10-18 08:54 Iceland, driven close to bankruptcy as frozen credit markets caused its banks to fail, will decide within a week whether to take an IMF loan. In Russia, hit hard by the crisis and international wariness after a brief war with former Soviet Georgia, Finance Minister Alexei Kudrin said investors had pulled out $33 billion in August-September. Hungary slashed its forecast for growth next year by almost two percentage points, showing its economy set to suffer even if it can quell market upheaval around its banks and finances. On world share markets, buying of cheap bank stocks helped buoy prices though they later relinquished some of their gains. In Asia, governments scrambled to find ways to shore up their banks and try to combat an economic slowdown. Reflecting growing alarm over the widening credit crisis, a panel of Japan's ruling Liberal Democratic Party was considering schemes to recapitalize big banks with government money, the Kyodo news agency reported.
In the Republic of Korea, authorities pledged action to stabilize markets. Media reports said the steps, to be announced on Sunday, could include funding for local banks struggling to find international banks willing to lend dollars. Australia's prime minister held a summit with industry leaders who said credit was drying up and smaller firms were collapsing despite assurances the economy was in good shape. Singapore and Malaysia both said they would guarantee all bank deposits until 2010, following similar moves worldwide. After world governments pledged $3.2 trillion to stabilize the financial sector, money markets have shown tentative signs of healing, though inter-bank lending is still tentative at best. The inter-bank cost of borrowing overnight dollars fell again in Europe although longer rates, including those for euros and sterling, were slower to ease with banks still reluctant to lend for longer periods. Until bank-to-bank lending - frozen for much of the last year by uncertainty over which groups faced financial disaster - is flowing freely again, corporate activity and consumer spending cannot hope to recover. Evidence mounted that a recession may be unavoidable even if a financial meltdown has been averted. Bank of Japan Governor Masaaki Shirakawa said there was growing uncertainty over the bank's view the economy would return to moderate growth. European Central Bank policymaker Guy Quaden said the euro zone's economic prospects had deteriorated over the last week amid the latest leg of the financial crisis. Agencies |
