Keystone, Georgios Kefalas) GERMANY OUT - AUSTRIA OUT, Associated Press
BASEL, Switzerland — The world's leading central bankers said Monday that while the global economy is slowing they do not expect it to enter recession, but stand ready to provide liquidity support to banks in need.
European Central Bank chief Jean-Claude Trichet said they believe they "have the weaponry to provide liquidity" to banks as needed worldwide provided there is adequate collateral.
"We are certainly observing ourselves the slowing down of the global economy," Trichet said as chairman of his last Global Economy Meeting of the Bank for International Settlements. But, he added, "We don't see a recession in the cards, not at all."
Trichet said the central bankers believe debt-hobbled nations must quickly regain control of their finances and "inspire confidence."
"We see at the global level the necessity to take into account the different national circumstances," he told reporters at a press conference sponsored by the Basel-based BIS, an umbrella organization for the world's central banks and key standard-setter for the world economy.
"We stand ready to provide liquidity to banks as required," he said.
Banks give each other short-term loans in what is known as the interbank lending market. When market tensions increase, some banks will become reluctant to lend money for fear of not getting it back.
So central banks, such as the ECB in the eurozone, will offer such short-term loans at fixed interest rates and against collateral to support confidence in the banking system.
Trichet said bankers were "examining the situation" afflicting debt-crippled Greece.
"I don't think that there is any doubt from anybody if they confirm all their commitments, than they will be in a better situation," he said.
He added that the Swiss National Bank had explained its move to put a ceiling on the export-sapping strength of the Swiss franc and that the central banks understood its position.
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