No 10: 'Serious situation' in financial markets
Downing Street has accepted that the financial markets are in a "very serious situation" after six of the world's biggest central banks announced joint action to ease the global liquidity crisis.
The Prime Minister's official spokesman said this afternoon: "This is about extending some support rather than I think new support, and it's about having sensible contingency plans in place because clearly there is a very serious situation in financial markets at the present time, and we are experiencing a credit crunch, and that central bank action is about trying to mitigate the effects of that credit crunch."
The banks - including the Bank of England and the Federal Reserve - will cut by half the cost of a current programme under which utility banks can borrow dollars from their own central banks.
"The purpose of these actions is to ease strains in financial markets and thereby mitigate the effects of such strains on the supply of credit to households and businesses and so help foster economic activity," the banks said in a statement.
European Commissioner Olli Rehn has also warned that there are only ten days to save the eurozone. European finance ministers are meeting today in Brussels to discuss the continuing economic crisis.
Asked whether it was the Government's assessment that the eurozone was about to collapse, the Number 10 spokesman said: "Well, I think you shouldn't interpret today's announcements in that way. You know, they are, central banks here are saying we are ensuring we have the capacity to act because we can see that there are severe strains in financial markets, and that situation has been getting worse in recent months, and therefore it is right for us to ensure we have the capacity to act if we need to, to ease those strains."