the VOA Special English Economics Report.
week, economic worries turned from inflation.
On Wednesday, central banks in nations around the world acted together
to lower interest rates. The fear is
that a lack of credit and falling demand could cause a deep, worldwide recession.
International Monetary Fund has warned that the world is facing its most
dangerous economic crisis since the nineteen thirties.
slowing economic growth, the United States Federal Reserve cut its federal
funds rate to one and one half percent.
That is the rate banks charge each other for overnight loans. The European Central Bank also announced an
interest rate cut. So did central banks
in Britain, Canada, Sweden and Switzerland.
Australia and China also cut interest rates.
action marked the first time that the Federal Reserve has joined with other
central banks to cut interest rates.
the Fed said it will make short-term loans by purchasing what is called
commercial paper. Such loans usually
come from pools, or collections, of investment money. The goal is to provide financial help to all companies that need
short-term loans to operate. Earlier,
the central bank announced loans to banks of up to nine hundred billion
countries are also taking steps to deal with the crisis. The Economist magazine reports that European
banks have borrowed more against their bank deposits than American banks
have. This puts them at greater risk
when there are low levels of activity in credit markets.
is an example. Its banks borrowed many
times the amount of money they held in deposits. In recent weeks, Iceland has had to seize three major banks. The nation has asked for a loan of more than
five billion dollars from Russia to avoid a collapse of its financial system.
countries have taken steps to keep people from withdrawing money from
banks. Ireland, Germany and Britain
increased the limit of bank deposits guaranteed by their governments.
British government has announced a rescue plan similar to the one passed by the
United States Congress. Britain will
make eighty-seven billion dollars available to eight major banks. It will also provide hundreds of billions of
dollars in loans and guarantees to the banking system.
that is the VOA Special English ECONOMICS REPORT, written by Mario Ritter. I'm Steve Ember.