CP market and money markets gridlocked
Tue, Oct 7 2008, 07:52 GMT
by Danske Research Team
- Following the passing of the USD 700bn bailout package, the key problem in the financial crisis remains the deadlocked money markets. In this paper we look at the problems in the commercial paper (CP) market and the implications for money markets.
- The combination of increased fear and uncertainty about bank survival, combined with the drying up of funding via the CP market, has created massive problems in dollar money markets.
- The Fed announced its latest initiatives to combat the money market problems today. Further initiatives will probably be needed. We would not be surprised to see the US authorities targeting the problems in the CP market going forward.
