Central banks on stand-by to initiate monetary easing plan in Europe, say G20 Officials – Part 2

Since the sovereign debt crisis started to cool off a bit, its inoculation into the US stock market had started to wear off as well. However, the recent news has left its effects on the likes of New York Stock Exchange and NASDAQ as stocks began to respond to both news.

The market took to a little spike in late hours when the news broke that several central banks are on stand-by to lend monetary help to the banks working in Europe. Citigroup, JPMorgan Chase, Goldman Sachs, and Morgan Stanley all experienced a big pop just after 3 PM on Thursday, as did on US banks Deutsche Bank, HSBC, Banco Santander, and Barclays, also trading in the country.

However, some experts are of the opinion that the anticipation is a little overboard. There is no such casualty expected from Greek election results. According to them, it is a measure to boost confidence in the European market after debt crisis.

”This is just broadening future funding options for banks, rather than having any large flow impact in the near-term,” explained Jens Nordvig of Nomura. “This may be very important for psychology around banks.”

This is not the first time that central banks are planning to or are injection government dollar in to the private business entities. After Lehman went bankrupt in 2008, the US government and the Fed initiated a quantitative easing to bring the likes of JP Morgan, Chase and Bank of America ashore.

That was done to bring the market confidence back to its feet, so is the this easing plan which might bring serenity in the nearly disruptive Euro market.

European Central Banks has also agreed to a bailout plan for Spain in tune of $120 Billion.

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Posted by Usman Khalid on Jun 15 2012. Filed under Business, Europe. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.