NEW YORK, March 4: The global merchandise trade is worth $13.6 billion dollar. And at the best of times banks used to finance upto 90 per cent of the trade. Lenders pulled back sharply when the credit crunch hit the market.
This forced governments that are already providing trillions of dollars to financial institutions to support another vital part of the system that extends loans to exporters and importers, the New York Times (NYT) in a report said.
Loans have dried. Japan has found out an alternative. It has huge foreign exchange reserve of $1.0 trillion. In a rare move, Japan would dip its hand into the foreign exchange reserve to help Toyota, world's largest automaker, Sony the electrical goods giant and other struggling exporters to ease their cash problem.
The autosales slipped 41 per cent in February despite lucrative offers. The automakers have slashed per unit price by more than $2500 .Toyota is seeking $2.0 billion loan. General Motors may be forced to shut down three of its plants in Europe and axe more than 300,000 jobs. BMW another big auto maker is of course going on the reverse direction, warning government against intervention.
S&P has downgraded Bank of America's rating by one notch. Bank's credit rating has been cut for the second time in three months amid concerns that the weakening of economy and the acquisition of Merrill Lynch has hurt bank's earning. Bank's credit worthiness has deteriorated because of its exposure to toxic assets.
Standard Chartered said that it was benefiting from withdrawal from other foreign banks in emerging markets. The bank said it has been able to weather the impact of the economic meltdown. Large international banks such as Royal Bank of Scotland and Citigroup are scaling back their international operations. Shares in Hong Kong Shanghai Banking Corporation ( HSBC ) dropped to its lowest level for than 10 years. The equity markets were in the grip of nervousness after warnings from Fed chairman Ben Barnanke who said policymakers may need to provide further aid to the banking system and called for further aggressive action to bolster the economy. Equity markets were subdued though there is a possibility of fresh generation of $1000 billion under Term Asset-Backed Securities Loan Facility.
France and Germany will launch a renewed crackdown on tax dodgers and close scrutiny of off-shore banking that help people to stash their money without paying taxes. UBS Switzerland's biggest bank is reeling under a tax scandal that has undermined country's vaunted banking secrecy. Brussels is expected to throw its weight behind an overhaul of European financial regulation committing to push for a new structure for supervising institutions and monitoring systematic risks, a reputed paper said. Eurozone authorities would help a member state in serious economic difficulties before it needed to approach the IMF because of debt default risk
Greece and Ireland are two countries under most pressure because of the global crisis. Financing needs of the world's poorest countries hit by the global crisis will increase by $25 billion in 2009 to a total of $140 billion, the IMF said The multilateral agency has identified 26 countries many of them oil exporters that will be vulnerable due to collapse of the global economy.
Lenders pull back from financing global merchandise trade
From Fazle Rashid | Published: March 05, 2009 00:00:00 | Updated: February 01, 2018 00:00:00
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