USD1 trillion global emergency fund to stabilise world financial markets

May 11, 2010 by admin

Global policy makers issue a financial emergency package worth a total of USD 1 trillion to stabilize world financial markets and resolve Greek debt crisis that threatens the stability of the euro.

This financial emergency package is the largest in the two years since the leaders of the G20 injecting money to the global economy after the fall of Lehman Brothers. Financial analysts are quite surprised with the size of the package, and as a result; the euro rose to 2%, while shares in Asia becomes increasingly strong.

U.S. Federal Reserve reopened the currency swap line with the central bank tries to ensure the market liquidity of dollars and the European Central Bank (ECB) said it will buy government debt to recover the confidence of investors.

A Professor at the University of Maryland, Peter Morici said, “With the establishment of a fund of €750 billion to save the Greek’s economy and help other countries which have the same problem; Germany and other European countries also envision the same dreams: the single European currency and the wider European unity – which at first may not be achieved (with the debt crisis).”

Financial markets have punished heavily indebted euro zone members, for example: Portugal, Spain and Ireland; threatening to throw them into Greece’s troubles, in turn roiling global markets.

The USD1 trillion packages are consists of €440 billion in guarantees from euro area states, and €60 billion in a European instrument.