0 Join Central Bank Liquidity Thaw

Join Central Bank Liquidity Thaw

Drying up of liquidity pushed the world's major central banks to pump funds to financial markets still throb. The Federal Reserve increased the amount of dollars available for its swap facilities, and may be accessed by the world's central banks. The fund has now quadrupled, from the previous 67 billion dollars to 247 billion dollars.

This step is to address the shortage of dollars in the market. "Investors do not trust the banks," said Jim O'Neill, chief economist at Goldman Sachs Group Inc. .. They were looking for a safe and move the dollar into gold and government securities.

In the new agreement, the European Central Bank (ECB) to double the number of dollars from the Fed to 110 billion U.S. dollars. Swiss central bank quota of 27 billion U.S. dollars. The Bank of Japan, Britain, and Canada, each receive 60 billion dollars, 40 billion dollars and 10 billion U.S. dollars. Each central bank could auction off the dollar is in its own market.

ECB, Bank of England, and Switzerland has distributed a total of 64 billion dollars. Being On the same day, the Fed also injected 50 billion dollars into the banking system. Global central banks is aggressively flooding the market with liquidity. Since the collapse of Lehman Brothers Inc., The central bank has invested more than 200 billion dollars through its market operations.

The success of these efforts? With that last deal, the market reacted positively. In addition to global markets improved slightly, money market conditions are also quieter. Thursday (18/7), the cost of borrowing dollars overnight fell to 3.84 percent from 5.03 percent the previous day.

In contrast to the situation of the world, in Indonesia liquidity drag more effective because the Treasury did not realize budget. Parking of funds in Bank Indonesia had already amounted to Rp 120 trillion. Chief Economist Tony Prastiantono assess BNI, Bank and Ministry of Finance to immediately disburse the funds. "The cure is a liquidity crisis," he said.

Beyond that, a global central bank cash injections had positive impact on our stock. JCI gained 1 percent yesterday. "Asia index will move according to the U.S. economy. Because the U.S. still controls 30 percent of global finance," said Felix Sindhunata capital markets. (Dyah Megasari, Diade Riva Nugrahani, Rika Theo)

Sources: KONTAN