Ambrose Evans-Pritchard: Central Bank flight to Federal Reserve safety tops Lehman crisis

Central banks and official bodies have parked record sums of dollars at the US Federal Reserve for safe-keeping, indicating a clear loss of trust in commercial banks.

Data from the St Louis Fed shows that reserve funds from “official foreign accounts” have doubled since the start of the year, with a dramatic surge since the end of July when the eurozone debt crisis spread to Italy and Spain.

“This shows a pervasive loss of confidence in the European banking system,” said Simon Ward from Henderson Global Investors. “Central banks are worried about the security of their deposits so they are placing the money with the Fed.”

Read it all and take a careful look at that chart.


Posted in * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, Credit Markets, Currency Markets, Economy, Euro, Europe, European Central Bank, Federal Reserve, The Banking System/Sector, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The U.S. Government

4 comments on “Ambrose Evans-Pritchard: Central Bank flight to Federal Reserve safety tops Lehman crisis

  1. Marie Blocher says:

    The link just leads back to this posting.

  2. Marie Blocher says:

    Now I get a Not Found error for it.
    The requested URL /t19/Central bank flight to Federal Reserve safety tops Lehman crisis was not found on this server.

  3. Kendall Harmon says:

    Sincerest apologies, there was an issue the link is now fixed.

  4. Marie Blocher says:

    Thank you, Fr Harmon.
    When the mortgage crisis hit, banks here had to mark to market (roughly 0) all the mortgage securities they held. When the European banks decided to reduce the value of Greek bonds they held by 21%, instead of a more realistic number, they were misleading investors and themselves about the likelihood of recovering their investment in the bonds. Now they don’t even trust each others balance sheets, no wonder that European governments don’t either.