In an earlier statement issued on September 12, Köhler said: “I have assured the membership that the IMF is closely monitroing the situation, and stands ready to assist its member countries as appropriate. Our present assessment is that, despite the scale of the human tragedy, these terrible events would have only a limited impact on the international monetary and financial system.” (IMF News Brief, No. 01/88, September 12).
Statements in Europe
In Rome, the Italian Treasury, the current president of the Group of Seven, issued a statement on September 12 on behalf of the Group’s finance ministers and central bank governors emphasizing their commitment “to ensuring that this tragedy will not be compounded by disruption to the global economy.”
The ministers of economies and finance of the European Union, the European Central Bank, and the central bank governors of the European Union and European Commission, issued a joint statement in Brussels on September 12, pledging to take “all necessary measures…to ensure the proper functioning of markets and the stability of the financial system.”
In a further move to stabilize the system, on September 13, the U.S. Federal Reserve Board announced that it and the European Central Bank (ECB) had agreed on a swap agreement “in order to facilitate the functioning of financial markets and provide liquidity in dollars.” Under the agreement, the ECB would be eligible to draw up to $50 billion, receiving dollar deposits at the Federal Reserve Bank of New York. In exchange, the New York Federal Reserve Bank would receive euro deposits of an equivalent amount at the ECB.
The statement said that the ECB would make these dollar deposits available to national central banks of the Eurosystem, which will use them to help meet dollar liquidity needs of European banks, whose U.S. operations had been affected by the disturbances in the United States. The swap line will expire in 30 days.
The next issue of the IMFSurvey will be published on October 8.