17.03.2009  
     
 
The Globalization Of The Central Banking System
 
  In a fascinating article, Ryan Grim examines how the U.S. Federal Reserve Bank in recent months has literally pumped billions of dollars into central banks around the world. As Grim points out - and I concur -, this aspect of the global financial crisis hasn't been reported by mainstream media previously.

In essence, writes Grim, the Fed has been acting as the world's central bank since last year in a move that is a clear step into territory usually occupied by the International Monetary Fund (IMF). According to the article, 314 billion dollars are currently loaned to international central banks by the Federal Reserve, down from almost 600 billion in December. The central banks use the money to rescue financial institutions in their own countries. The transactions, writes Grim, are conducted as swaps, whereby the Fed receives the equal amount of its loan in foreign currency.

As a consequence of this money injection program, the Fed and other global central banks are very tighly linked to each other. If everything goes well and the central banks can repay their loans, this is not a problem. Difficulties for both sides could arise, if central banks can't repay their loans and thus internationalize their problem.

European countries participating in this program, according to Grim are, Denmark, Britain, Switzerland, Sweden and Norway. To read the article in the Huffington Post click here.
 
 
 
Michael Knigge 17.03.2009, 20:57 # 0 Comments
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