Money markets recover to early 2008 levels: BIS

Published by rudy Date posted on September 14, 2009

The financial markets are showing signs of normalising, with interbank money markets recovering to levels not seen since early 2008, the world’s biggest central bank body said Sunday.

“Despite uncertainty about the pace of economic recovery, investors remained cautiously optimistic in the period between end-May and early September 2009,” said the Bank for International Settlements.

In particular, “in interbank money markets, key spreads narrowed to levels not seen since the beginning of 2008”, added the bank for central banks.

The spread of United States rates even fell to the lowest level since the outbreak of the financial crisis in mid-2007, noted the BIS.

The LIBOR/OIS spread or the premium that the London interbank offered rate (LIBOR) trades over the Overnight Swap Rate (OIS) is often taken as an indicator of the level of stress in the money market.

In the aftermath of the collapse of venerable US bank Lehman Brothers, the spread widened sharply as lending froze up. Central banks had to take the extraordinary action of pumping in tonnes of liquidity to get lending flowing again.

In its latest quarterly statistical review, the BIS noted that “signs of receding liquidity premia and rebounding risk tolerance were also evident in bond markets”.

However, there was great volatility in the bond markets as investors appeared to be unsure about the pace of recovery.

“Over time, bond investors seemed to increasingly take the view that the worst of the economic downturn was over, but that recovery was likely to be gradual and vulnerable to setbacks.

“This, in combination with low expected inflation, led them to scale back expectations that monetary policies would begin to normalise anytime soon,” it said.

April 2025

World Day for Safety and Health at Work
“Safety and health at work every day!”

Invoke Article 33 of the ILO constitution
against the military junta in Myanmar to carry out the 2021 ILO Commission of Inquiry recommendations against serious violations of Forced Labour and Freedom of Association protocols.
Accept National Unity Government
(NUG) of Myanmar.
Reject Military!
#WearMask #WashHands #Distancing #TakePicturesVideos

Time to support & empower survivors. Time to spark a global conversation. Time for #GenerationEquality to #orangetheworld!

Monthly Observances:

March – Women’s Role in History Month
April – Month of Planet Earth

Weekly Observances:
Last Week of March: Protection and Gender Fair Treatment of the Girl Child Week
Last Week of April – World Immunization Week

Daily Observances:
Mar 25 – International Day of Remembrance of the Victims of Slavery and the Transallantic Slave Trade
Mar 27– Earth Hour
Apr 21 – Civil Service Day
Apr 22 – World Earth Day
Apr 28 – World Day for Safety and Health at Work

Trade Union Solidarity Campaigns

No to Trafficking

Jobs! Jobs! Jobs!

Categories