Coordinated central bank action to provide cheaper dollar funding for starved European banks is a step forward but only provides temporary relief, Bank of England governor Mervyn King said on Thursday.
The central banks of the United States, euro zone, Japan, Canada, Britain and Switzerland announced measures on Wednesday to provide liquidity to the financial system.
I think it has the benefit of demonstrating that central banks can and do work together...this generalised network of swap agreements, I think is a step forward and will help, King told a news conference.
But let me stress, this cannot be a solution to the underlying crisis, all this can do, is to help temporarily relieve liquidity problems. But liquidity problems, often, reflect underlying solvency problems and in this case they do.
(Reporting by Keith Weir; editing by Anna Willard)