Central Banks flood money market with $500 billion
Wednesday December 19, 2007
Central banks have unleashed $500 billion on the money market in an attempt to combat the lack of trust between banks who have tightened their belts since the sub-prime US mortgage disaster.
Inter-bank lending was hit hard and has already seen Australian home loan lender RAMS sold off to the Westpac Banking Corporation while Australian shopping giant Centro has found itself struggling to refinance more than a billion dollars worth of debt.
The European Central Bank scrapped the upper limit on how much it lends to banks, offering more than 348 billion euros at a 4.21 percent lowest rate.
Opinions are divided on whether the ECB's cash injection will help break the credit-market gridlock we have witnessed since the sub-prime mortgage disaster which is tipped to grow.
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