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Central Bank Intervention Raises Questions

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Did a big European bank come close to failing last night? European banks, especially French banks, rely heavily on funding in the wholesale money markets.

Given the actions of the world's largest central banks last night, it raises the question of whether a major bank was having difficulty funding its immediate liquidity needs. The Federal Reserve, the Bank of England, European Central Bank, the Bank of Japan, the Swiss National Bank, and the Bank of Canada in a coordinated action moved to provide liquidity to the global financial system. In a separate move, the Chinese Central Bank cut bank reserve requirements. The People's Bank of China cut reserve–requirement ratio by 0.5%, the first cut in nearly three years.

The problem was not at U.S. banks as is evidenced by a statement from the Federal Reserve.

(Read the full article in Forbes.com)

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