Major central banks pump cash in to calm markets by Delia Cruceru

Thursday the calm of the money markets was reestablished by the European Central Bank in order to prevent the financial system from seizing up. The ECB pumped into the system a record of 94.8 billion euros, France's biggest listed bank, BNP Paribas, froze withdrawals from three funds citing U.S. subprime mortgage market problems. U.S. President George W. Bush at a news conference sought to calm, saying that both the global and U.S. economy are strong and there is enough liquidity in the system. In Europe, before the ECB to act, traders said that the cash markets were seizing up. "There appears to be a dash for cash both in dollars and in euros," said Nick Parsons, head of market strategy at nabCapital in London. By injecting the biggest amount of money in a single operation, the ECB aimed to calm markets by assuring "orderly conditions in the euro money market", after that the rates came to a normal level, but money traders waited to see if the U.S. Federal Reserve will pump money as well. A Zurich-based money market trader said "the market is acting like a yo-yo. It's all very psychological. The possibility of a credit crunch returning is starting to spook everyone."

related story: http://uk.news.yahoo.com/rtrs/20070809/tbs-uk-moneymarkets-7318940_2.html

by Delia Cruceru for PocketNews (http://pocketnews.tv)

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