The rate on the day was by also tense from 1

The hypothesis of a coordinated intervention by major central banks on interest rates is deemed more credible by the operators. Other scenarios are mentioned, while the paralysis of currency markets persists and threatens the sphere of the credit term. Trust between banks is be restored. Obviously, the adoption of the plan to rescue the American financial system, intended to rid institutions of "rotten" assets, has not created the electroshock hoped on the interbank market.

The Fed to the manoeuvre

Federal Reserve (Fed) has also indicated yesterday that she was taking additional measures to meet the needs of refinancing of banks. The American Institute of emissions which increased, once again, significantly the size of its auctions. The amount of the refinancing operations at 28 days and 84 days (starting with that carried out yesterday) is doubled, from $ 150 billion each. On the other hand, auction planned in November to ensure the passage of year end, crucial for financial institutions, are also reviewed on the rise. Finally, the Fed has decided to pay interest on reserves lodged by banks to strengthen its balance sheet and funding support to the financial system device. Despite these announcements, tensions were palpable yesterday on the interbank market in dollars: the 3-month Libor rate, amounted to 4.28, or slightly down from the last score at 4,33, but clearly above the level of 2.8 which it evolved again in mid-September. The rate on the day was by also tense, from 1.99 to 2.36.

Europe in dispersed order

The situation was even more critical European markets where the interbank rate in euros, the Euribor 3 months, has increased from 5,339 5,345, demonstrating the failure of recent Government initiatives to reassure on the strength of the banks. The Germany thus apply to the rescue of Hypo Real Estate Bank and stated that it guaranteed the deposits of private savers to avoid massive withdrawals. The Denmark and the Sweden have announced similar measures, while the France and the Italy have made commitments to this effect. The resumption of the activities of Fortis by BNP Paribas in Belgium and the Luxembourg has obviously not more chastened minds.

In this context, investors wondered on solutions that could still disrupt the deal. "Beyond massive injections of liquidity, a concerted reduction of interest rates of the Bank of England, the Fed and the European Central Bank could represent a strong signal," said Stephane Deo at UBS. "The meeting of the Bank of England Thursday may inter alia provide an opportunity to do so." For the team of BNP Paribas, which recognizes the possibility of such a scenario, this initiative could be counterproductive.

Another idea is circulating: one that would be to reduce the amount of interest on the deposits of banking institutions from the European Central Bank to encourage them to recycle their excess liquidity in the interbank market. However, this coercive method seems difficult to put into practice for the francfortois Institute in an also tormented environment.

According the "Financial Times", in the United States, some evoke also a schema that the Fed could blank lending financial institutions regulated in the federal funds rate, a rate which would allow to fly the Libor and avoid a price increases in the cost of financing.