Emergency bank loan creates fears
Short-term traders are waiting to see whether markets will recover A row between Barclays and HSBC over the use of an emergency lending facility has shown how fragile market confidence has become.
On Monday, Barclays borrowed £314m from the Bank of England, fuelling fears that the bank was in trouble.
To calm the market, Barclays said its hands were tied after HSBC missed a deadline to transfer funds to their account, the Financial Times reported.
HSBC says Barclays' request was made too late for it to be honoured.
Interbank payments in the UK must be paid by 16:20BST and it is understood that Barclays made the loan request to HSBC too close to this cut-off point for HSBC to deliver the funds.
Fragile confidence
Under normal market conditions, a commercial bank tapping into the Bank of England's credit facility for a relatively small amount to balance its books at the end of a trading day would not have created much attention, say analysts.
This financing option is generally used a few times a month. As it is an emergency facility, it attracts a higher rate of interest - 1% above the base rate.
It is believed that the bank's emergency loan was not connected to the problems affecting much of the financial system.
Read More:
http://news.bbc.co.uk/1/hi/business/6960171.stm from the BBC News Story
We're currently seeing some problems in the World Financial Markets, due to the crisis in the American Sub-Prime Market, could this problem stabilise or could we see a World Wide Depression ? In both scenarios, how we do respond as Christians ?
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Blessings
Blair
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