JOINT ACTION

The US Federal Reserve, the European Central Bank, the Bank of England, and the central banks of Canada, Sweden and Switzerland took the unprecedented step on 8 October of co-ordinating a half-point percent cut in interest rates in an effort to ease the credit crunch.

Central banks cut interest rates

AMERICAS
MEXICO: President Felipe Calderon has proposed to spend $4.4bn on infrastructure and energy projects to boost the economy. The central bank has also begun to auction off $2.5bn in reserves to prop up the falling peso.

US: Treasury Secretary Henry Paulson has warned that some banks will fail despite the $700bn rescue package to shore up the financial system.

He said the financial crisis would not end soon and called for the plan's swift implementation.

The bail-out plan was voted through on 3 October by the US House of Representatives, days after it had rejected an earlier version. The Senate had approved the measure earlier and President George W Bush wasted no time signing it into law shortly afterwards.

Mr Paulson wants to use the money to buy up many of the dubious mortgage investments on Wall Street.

The hope is that eventually the Treasury can sell the distressed assets back into financial markets once the housing market has stabilised and make a profit.

The amended Congressional bill raised the government's guarantee on savings from $100,000 to $250,000 and included tax breaks.

US warns of further bank failures
Return


ASIA-PACIFIC
AUSTRALIA: Australia's central bank has cut its key interest rate from 7% to 6% - a much bigger-than-expected reduction.
The Reserve Bank of Australia said that the sharp cut was justified given the prospects for growth, even though inflation is currently above target.

Prime Minister Kevin Rudd said the move would maintain financial stability and help Australia in "tough times ahead".

The cut, the bank's largest since May 1992, was well received by investors and the stock market rallied.

Observers had only expected the rate to be cut to 6.5%.

Australia slashes interest rates
CHINA: China has also joined the interest rate offensive, cutting rates by 0.27 percentage points.

JAPAN: Prime Minister Taro Aso has said more action will need to be taken to boost the country's flagging economy, even after the lower house approved a $18bn stimulus plan.

In a sign that economic growth has nearly ground to a halt, figures for machinery orders - a key measure of capital spending - showed they slumped 14% in August.

SOUTH KOREA, HONG KONG, TAIWAN: The central banks of South Korea, Hong Kong and Taiwan joined the growing number of countries to cut their interest rates.

Return


EUROPE
AUSTRIA: Austria officially announced a guarantee for all personal bank savings, retroactive to 1 October.

"Deposits in Austrian banks are safe and the state is vouching for them," said Chancellor Alfred Gusenbauer.

BELGIUM: The Belgian government has agreed to guarantee bank deposits of up to 100,000 euros ($136,000) - an increase of 80,000 euros.

The country's largest banking group, Fortis, has been in difficulty since it joined two other banks to purchase the Dutch bank ABN Amro, just before the global financial crisis began.

After several failed bail-out attempts, French giant BNP Paribas agreed to buy 75% of Fortis's operations in Belgium and Luxembourg. The two governments will take a minority share of the company, while its Netherlands operation has been nationalised.

DENMARK: The Danish government and banks agreed on 5 October a crisis plan which removes the ceiling on savings deposit guarantees, to be funded partly by banks and partly by the taxpayer.

GERMANY: State-owned savings banks in Germany reported a flood of new deposits as people look for safer accounts which are insured for 100% of their value.

The country's second-biggest commercial property lender, Hypo Real Estate, was threatened with collapse last week after incurring large amounts of bad debt.

The government attempted a bail-out, only for it to collapse on 5 October after a banking consortium withdrew support for the deal. A new bail-out was arranged with guarantees of 50bn euros ($68bn; £38.7bn), 15bn euros more than the first rescue attempt.

The German government also announced what appeared to be unlimited guarantees for private savings. However, it said there would be no legislation to give extra protection to savers.

Chancellor Angela Merkel said those financiers who did "irresponsible business" would be made accountable.

Germany clinches bank rescue deal
GREECE: The Greek government said on 3 October it would fully guarantee all bank deposits of citizens, but an official added that this was a "political commitment" and the banking system was not at risk.

HUNGARY: The Hungarian government has proposed raising the guarantee on bank deposits from the current 6m to 13m forints (£40,000; 51,000 euro) following talks with the president of the Hungarian central bank.

ICELAND: The authorities have taken over the country's biggest bank, Kaupthing, the third such takeover in recent days. Iceland's financial regulator said the move was made to protect domestic deposits.

Two other largest banks, Landsbanki and Glitni, had earlier been nationalised.

Iceland's financial regulator said that Kaupthing's domestic deposits were fully guaranteed and that the bank was open for business as usual.

Iceland's parliament has passed emergency legislation giving the government wide-ranging powers to dictate banks' operations.

Prime Minister Geir Haarde said the legislation would help the island avoid national bankruptcy.

Iceland will also offer an unlimited guarantee for all savings accounts.

The Icelandic krona plummeted against the dollar after the government nationalised the country's third-largest bank, Glitnir, last week. By 3 October it had lost one-fifth of its value.

The government has agreed measures allowing the banks to sell off some foreign assets to help shore up the financial system.

Negotiations are underway with Russia for a big loan to support the country's banking system.

Moscow has offered more than $5bn in emergency loans.

Iceland takes control of top bank
IRELAND: Ireland was the first government to come to the rescue of its citizens' savings, promising on 30 September to guarantee all deposits, bonds and debts in its six main banks for two years.

The move initially prompted consternation among some European partners, but several countries have since followed suit.

Cowen defending Irish banks move
ITALY: The Italian Prime Minister, Silvio Berlusconi, said the government was prepared to buy stakes in failing banks while waiving voting rights in an effort to guarantee stability.

"Eventual intervention will be carried out by the treasury," said Mr Berlusconi after a cabinet meeting to address the impact on Italy of the global credit crisis.

NETHERLANDS: The Dutch government has said it will make 20bn euros (£16bn; $27bn) available to protect the financial sector from "extreme shocks" during the credit crisis.

Finance Minister Wouter Bos said any "essentially healthy" bank or insurer would have access to the funds.

The Netherlands has also trebled the amount of savers' deposits it will protect to 100,000 euros (£77,700; $136,776).

RUSSIA: President Dmitry Medvedev announced 950 billion roubles ($36.4bn) of long term help for banks at an emergency Kremlin meeting on 7 October.

Russia's two leading stock exchanges were forced to close after suffering massive falls in value.

Mr Medvedev called for urgent international measures to combat the global financial crisis in a statement.

"The crisis of the international financial system demands urgent joint action. It's absolutely obvious the time has come for new decisions," he said.

Falls halt Russian market trading
SPAIN: Spanish Prime Minister Jose Luis Rodriguez Zapatero on 7 October increased bank deposit guarantees to 100,000 euros ($136,000) from the current 20,000 euros.

Mr Zapatero told leading banks that the government would take immediate steps to increase deposit guarantees to boost confidence in the financial system.

Spain has been calling for a joint European initiative to tackle the world financial crisis.

UK: The government has announced a £50bn ($88bn) package to prop up eight of the largest banks and building societies. In return, the government would receive shares in those institutions.

A further £200bn would be made available by the Bank of England to provide the banking system with much-needed liquidity.

A special company will also be set up to provide up to £250bn in loan guarantees to banks and building societies.

The announcement came after UK banking shares plunged on 7 October and the British Chambers of Commerce (BCC) warned that Britain was already in a recession which could see unemployment rise by 350,000 by next year.

The UK government increased its guarantee to savers from £35,000 ($62,000) to £50,000 from 7 October.

The Northern Rock bank and the mortgage lender Bradford & Bingley were nationalised earlier, and two other large groups, HBOS and Lloyds TSB, are to merge.

UK unveils bank rescue plan
Return


MIDDLE EAST
ARAB STATES:Share prices have dropped precipitously this year, amid fears of weakness in Dubai's property boom and exposure to global markets. However, economists expect growth to continue at a moderate rate as the region's oil wealth cushions the worst of the financial turmoil.