According to Reuters, officials from the Group of Twenty (G20) revealed that, if the Greek General Election in the market turmoil, major central banks have been ready by providing liquidity and prevent a credit crunch to stabilize financial markets.

In this regard, analysts believe that, although the major central banks prepared to take action, but face different obstacles, so the times of financial crisis in 2008 when the possibility of a rate cut is relatively small due to the loose monetary policy. Furthermore, even if the Greek election results to the market satisfied with the euro area will not end, the market should not be too optimistic.

Central banks or joint action

Reuters reported that a senior U.S. official warned that the Greek general election will not provide a decisive signal "to the table along is the debt crisis in the next step will be how to develop, but if Greece and other countries held elections lead to serious market pressure, major central banks has been fully prepared, will ensure there is sufficient liquidity within the financial system.

A G2O Senior Assistant officials said that the major central banks are preparing to join forces to take action to provide liquidity. Other the over G2O officials also confirmed this view.

June 18, the Group of Twenty Summit will be held in Los Cabos, Mexico. Bly Ladd, Vice Minister of the U.S. Treasury for International Affairs, said on the 15th issue of European debt crisis will be the highlight of the summit to discuss, but European policy makers do not make any decision at the summit.

According to another report, sources from G2O, said the Group of Seven (G7) finance ministers in 18 or 19, may be held in Los Cabos, an emergency meeting when the G7 central bank governors will also attend the meeting via telephone. The meeting may be the first issued a statement to show decision-makers are prepared to take all necessary action to ensure market stability, which usually indicates will then take the technical steps to maintain the flow of funds of the financial system.

The report said that the G7 may take measures, including currency swaps, which will ensure that the case of the influx of global investors hedge U.S. assets, the financial system has sufficient dollars. In addition, central banks may also repurchase agreements to the banking sector to inject short-term funds, or intervention rate.

Earlier in the 15th, the European Central Bank President Mario Draghi said the ECB ready to take measures to provide financing for the euro area bank solvency but a liquidity difficulties.

Market should not be too optimistic

The Greek general election was seen as a referendum in Greece will stay in the euro area, so the market focus on the degree of high. Optimistic expectations to promote the 15th US-European stock markets generally rose. U.S. S & P 500 Index and the Nasdaq composite index, Germany's DAX index and France's CAC index rose more than 1%.

However, analysts believe that, although central banks may cooperate to cope with the credit crunch and market volatility, countries adopt a liberal monetary policy faced with different obstacles, collaborative relaxation of monetary policy is unlikely.

October 2008 the worst period of financial crisis, the world's major central banks have synergies to cut interest rates. Credit markets, once faced with depletion of the inter-bank borrowing costs climb, the stock market volatility, market sentiment volatility index (VIX) hit a record high of 80 above the But the present situation, these parameters were not under pressure.

At the same time, central banks room for maneuver has not. The Federal Reserve and the Bank of Japan's benchmark interest rate is actually in the zero level, the Bank of England interest rate of 0.5%, only the European Central Bank interest rate is 1%, more substantial room for downward adjustment. However, some European central bankers to cut interest rates to keep an open mind, the premise of the European Central Bank to take action should the EU leaders as soon as possible to resolve the debt crisis of the program plan.

In addition, even the Greek election results to the market satisfied with the euro area will not end. After the end of the Greek general election, the country is still facing an economic downturn, the chaos of the debt financing difficulties and the political decision-making, short-term difficult to change. In addition, the other heavily indebted euro zone crisis in the country are frequent, and Spain's banking rescue package last week failed to reassure markets, the yields of the country has returned to 7% above the "high-risk line.


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