Financial crisis: World round-up

A look at the regions of the world most affected by the financial crisis, and
what governments are doing to try to alleviate the financial turmoil.

JOINT ACTION
The International Monetary Fund said it was ready to lend to countries hit by the
credit crunch, using an emergency funding mechanism first used in the 1990s Asian
financial crisis.
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 cut in interest rates in an effort to ease the
credit crunch.
On 13 October, the 15 countries in the eurozone agreed a joint plan to guarantee
loans between banks, and provide government capital to protect ailing financial
institutions.

• Central banks cut interest rates

• European banks rescue plan agreed

AMERICAS

ARGENTINA: The government is considering a host of measures to contain the

impact of the global financial crisis, including a pact with businesses and unions to
avoid job losses, higher tariffs on imports, trade barriers and a weaker pesos, local
media have reported.
BRAZIL: Brazil's central bank sold at least $589m in its foreign currency reserves in
a bid to stabilise the real. It also announced that it would free up about $10bn in
credit by easing limits on bank reserves. The Sao Paulo Stock Exchange suspended
dealing for three times in a week after declines on the Bovespa index topped 10%.

CANADA: The Bank of Canada cut its key interest rate by half a percentage point to
2.5% on 8 October in a co-ordinated effort with other central banks. The
International Monetary Fund (IMF) later forecast that Canada would lead the G7 in
growth in 2009.

MEXICO: President Felipe Calderon has proposed to spend $4.4bn on infrastructure

and energy projects to boost the economy. The central bank also sold a combined
$8.9bn in foreign currency reserves in a week 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. Mr. Paulson
wants to use the money to buy up many of the dubious mortgage investments on
Wall Street.

• US warns of further bank failures

ASIA-PACIFIC

AUSTRALIA: Australia's central bank cut its key interest rate from 7% to 6% - a
much larger-than-expected reduction. The government later announced it would
guarantee all bank deposits with financial institutions over the next three years.

• Australia slashes interest rates

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

HONG KONG, TAIWAN: The central banks of Hong Kong and Taiwan joined the
growing number of countries to cut their interest rates.
JAPAN: Prime Minister Taro Aso said he would call an emergency summit of the G8
if finance ministers meeting in Washington did not reach agreement to take action on
the credit crisis.

He has said more action would need to be taken to boost the country's flagging
economy, even after the lower house approved a 1.8 trillion yen ($18bn) stimulus
plan and the Bank of Japan put 4.5 trillion yen ($45.5 billion) into the banking
system.

On 13 October, the Bank of Japan said it was considering taking measures similar to
those adopted by the ECB and other major central banks to provide sufficient
liquidity in short-term funding markets.

NEW ZEALAND: The government is planning to guarantee retail deposits, initially

for two years.

SOUTH KOREA: The South Korean central bank cut its benchmark interest rate and
repeatedly intervened in the currency markets to support the won. Regulators
meanwhile announced measures to reduce market speculation.

EUROPE

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

BELGIUM: The Belgian government 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, needed the intervention of the Belgian
and Dutch governments and the sale of some of its assets to French giant BNP
Paribas, to stay alive after getting into difficulty over the purchase of Dutch bank
ABN Amro.

DENMARK: The Danish parliament approved a government-backed crisis plan which

gives an unlimited guarantee to savings deposits.

ESTONIA: The government more than doubled its bank deposit guarantee to 50,000
euros ($68,000), in line with other European Union member states.
FRANCE: The government is expected to announce the creation of a multi-billion-
dollar fund to acquire stakes in ailing French financial institutions following the
eurozone agreement on 12 October.

GERMANY: The country's second-biggest commercial property lender, Hypo Real

Estate, was threatened with collapse last week after incurring large amounts of bad
debt. It survived after a government-sponsored rescue was arranged. In an attempt
to prevent a subsequent run on banks, the government announced it would
guarantee all personal bank deposits in the country.
A rescue package for German financial institutions set to be presented to the cabinet
by Chancellor Angela Merkel on 13 October, will include a fund to provide up to
400bn euros ($549bn) in bank guarantees and some 70bn euros ($95bn) to invest in
banks in a similar manner to those announced by the UK, according to a draft seen
by the Reuters news agency.

• 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 proposed raising the guarantee on bank

deposits from the current 6m to 13m forints ($67,000) following talks with the
president of the Hungarian central bank.

ICELAND: The authorities took over the country's biggest bank, Kaupthing, the third
such takeover in two weeks. 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 parliament passed emergency legislation giving the government wide-
ranging powers to dictate banks' operations.
The government agreed measures allowing the banks to sell off some foreign assets
to help shore up the financial system.
Negotiations are under way with Russia for a big loan to support the country's
banking system. Moscow has offered more than $5bn in emergency loans.
Industry Minister Ossur Skarphedinsson also said the government might turn to the
International Monetary Fund (IMF) for foreign currency to ensure imports flow freely,
help banks trade again, and ensure a cut in interest rates.
Trading on the Reykjavik stock exchange was suspended for a third consecutive day
on 13 October in response to "unusual market conditions".

• 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.

ITALY: Prime Minister Silvio Berlusconi said on 8 October that the government was
prepared to buy stakes in failing banks while waiving voting rights in an effort to
guarantee stability. Under the emergency measure approved by the cabinet, the
government would step in to back deposits up to the current insured level of 103,000
euros ($140,900), if necessary.

NETHERLANDS: The Dutch government said it would make 20bn euros ($27bn)
available to protect the financial sector from "extreme shocks" during the credit
crisis. The Netherlands has also trebled the amount of savers' deposits it will protect
to 100,000 euros ($136,776).

NORWAY: Norway's central bank said it would issue up to 41bn euros in bonds to
pay for measures to support banks.

PORTUGAL: The government said it would guarantee bank deposits and offer a
financing line worth 20bn euros ($27.5bn) to guarantee the liquidity of its banks.

RUSSIA: The parliament's lower house, the State Duma, passed a law giving the
state-run Bank for Development and Foreign Economic Activities 1.3 trillion roubles
($50bn) to pay off or service Russian banks' foreign loans.
It came after President Dmitry Medvedev announced 950bn roubles ($36.4bn) of
long-term help for banks at an emergency Kremlin meeting on 7 October.

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. Spain has been calling for a joint European initiative to tackle the world
financial crisis.
SWITZERLAND: Economics Minister Doris Leuthard said the government had
contingency plans to prevent the collapse of the country's two biggest banks, UBS
and Credit Suisse Group, who have recently incurred multi-billion-dollar losses. The
government also said it was considering how much the current bank deposit
guarantee of 30,000 Swiss francs ($26,620) should be raised.

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 £450bn would be made available to provide
liquidity to the money markets and loan guarantees for banks.
The announcement came after 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.
Following negotiations, the government announced on 13 October that it would inject
£37bn ($64bn) of taxpayers' money into three major banks. Royal Bank of Scotland
(RBS) is to receive £20bn ($34bn) - with the government buying £5bn of preference
shares and underwriting £15bn of ordinary shares. A further £17bn ($30bn) will be
injected into HBOS and Lloyds TSB "upon successful merger", while Barclays said it
would seek an alternative source for £6.5bn ($11bn).

• UK unveils bank rescue plan

• UK banks' £37bn bail-out unveiled

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.
In an effort to boost confidence in the financial system, the Saudi Arabian Monetary
Agency (SAMA) cut its benchmark interest rate on 12 October for the first time in
almost two years. The government of the United Arab Emirates meanwhile promised
to protect national banks and guarantee deposits.
SOUTH ASIA

INDIA: The central bank has moved to inject 600bn rupees ($12.2bn) into the
money markets after sharp falls in Mumbai's stock exchange and the plunge of the
rupee to an all-time low. It also cut the cash reserve ration for banks by 150 basis
points to 7.5% on 12 October, releasing billions of dollars into the banking system.

Source: http://news.bbc.co.uk/2/hi/business/7654647.stm#southasia