The European Central Bank will deliver on its mandate to maintain price stability, which is a prerequisite for financial stability, through permanent and credible alertness, ECB President Jean-Claude Trichet said. The ECB pumped €30 billion ($43 billion) into the euro zone money market.
“Europe can count on the (ECB) ... to implement in this century the historic task which was assigned to us at the end of last century,” Trichet said in a speech on Monday. “We will be faithful to the primary mandate given to us by the (EU) treaty.” “We also know that price stability is a prerequisite for financial stability, a very important objective at the current juncture,” he said. “As I said, at the current juncture there is no place for complacency but for permanent, credible alertness,” he said.
Financial markets were shaken to the core on Monday after investment bank Lehman Brothers filed for bankruptcy protection as the latest casualty of the global credit squeeze triggered by the sub-prime mortgage market crisis in the United States. Bank of America agreed to buy Merrill Lynch in an all-stock deal worth $50 billion, seeking a bargain as the world’s largest retail brokerage sought refuge from fears it could be the next victim.
The US Federal Reserve said for the first time it would accept stocks in exchange for cash loans and 10 of the world’s top banks agreed to establish a $70 billion emergency fund, with any one of them able to tap up to a third of that. Trichet would not directly comment on the Lehman developments. “We are facing many challenges with our colleagues in other continents, across the channel, across the Atlantic and across the Pacific,” he said in the speech. (Reuters)
The European Central Bank pumped €30 billion ($43 billion) into the euro zone money market in a one-day refinancing operation Monday in response to the crisis in the US banking sector- reports newswire dpa. The ECB said the quick tender had drawn bids from 51 banks for a total of €90.27 billion and that the allocation of the €30 billion had taken place at an average rate of 4.39%. The ECB’s minimum rate for refinancing operations is currently 4.25%. (m&c.com)