Bank of Canada greases financial system with $12B in new cash
06.10.2008 18:03
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- Source: cbc.ca
In one swoop, Canada's central bank shoved another $12 billion into the country's financial system Friday, an increase of 150 per cent from previous injections. The move means the Bank of Canada has boosted the extra dollars it has pumped into the Canadian economy from $8 billion to $20 billion. "In light of persistent pressures in these markets, the bank announces additional steps to provide term liquidity through term purchase and resale agreements," said the central bank in a press release. Central banks around the world have spent the last three weeks trying to reassure nervous financial markets that a sufficiently large pool of borrowing cash exists to allow firms to get funds to keep their operations going. In the wake of September's financial crisis on Wall Street, lenders have been pulling liquidity from capital markets, either in the form of reduced lending or through the non-purchase of various financial instruments. For example, for the first time ever, Canada did not see a new initial public offering come to the investment markets in the July-to-September quarter this year, a sign of a lack of appetite for such share issues. The lack of private sector lending has left cash-strapped firms unable to get enough money to pay for product inventory and cover other financial obligations, such as servicing their debts. As result, central banks in many countries have been shoving tons of cash out their wickets in an effort to keep these firms in operation. On Sept. 30, Australia's central bank increased the currency swap line by $20 billion US. On Sept. 18, the U.S. Federal Reserve authorized the auctioning of $180 billion in U.S. dollars. Around the same time, the Bank of England and the European Central Bank offered up to $40 billion US in overnight funds to credit markets. Canada, along with other countries like Italy, has been relatively insulated from the worst of Wall Street's financial meltdown. Still, Canadian dollar liquidity is often of value to firms that pay their bills in loonies. Thus, the Bank of Canada's aggressive move into the cash markets might be a sign that firms in this country are having trouble securing new sources of capital for their businesses. RelatedVideo Havard Gould reports: Bank of Canada greases financial system with $12B in new cash (Runs: 2:34)Play: QuickTime »Play: Real Media »Consumer HeadlinesFinancial crisis shows wealth a 'house built on sand': PopeThe economic meltdown being felt in nations around the world shows how fleeting modern materialism is, Pope Benedict said Monday.For-profit clinics double-billing: reportThe federal government has failed to enforce the Canada Health Act's requirements for equal access to hospital care, instead allowing more for-profit medical clinics over the last five years, the Ontario Health Coalition said in a report released Monday.TSX dips below 10,000North American stock markets plunged sharply again Monday, driven by economic doubts and concern about the $700-billion US bailout of the American financial system. Policy change delayed alarm signal over listeria, inspectors sayInspectors with the Canadian Food Inspection Agency say their hands-on role at meat plants changed with a CFIA policy introduced three months before the listeriosis outbreak.Hamsters among exotic pets that tots should avoid: U.S. groupYoung children should not have exotic animals as pets because of the risk of disease, says a U.S. pediatrician group. Consumer Life FeaturesYOUR VIEWTake back your phoneTips to avoid telemarketersVIDEOAutomotiveGreen Zenn cars roll out in Canada (2:18)SAFETYRecalls and Advisories- Salad dressing
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