World leaders rush in to shore up panic-hit global financial system

Business

World finance leaders tried to lift confidence with emergency measures to pour cash into panic-stricken markets on Thursday, as investors everywhere dumped assets, switching to dollars amid the escalating coronavirus pandemic.

Policymakers in the United States, Europe and Asia have slashed interest rates and opened liquidity taps to stabilize economies left almost comatose, with quarantined consumers, broken supply chains, paralyzed transportation and depleted shops.

While finance ministers and central bankers adopted similar strategies, markets and nations where borders were being closed and cities placed in virtual lockdown were further alarmed by bickering between global powers – the United States and China.

There were almost 219,000 cases of coronavirus reported globally, including over 8,900 deaths linked to the virus. Over 20,000 of those cases were reported in the past 24 hours, a new daily record.

China, where the epidemic first started in December, provided a glimmer of hope, as it reported zero new local transmissions of virus, though imported cases surged, accounting for all 34 new cases on Wednesday.

While the economic crisis spawned by the pandemic caused carnage in stock markets, almost every currency, except the euro and safe-haven yen, collapsed against the dollar.

The European Central Bank launched new bond purchases worth 750 billion euros ($817 billion) at an emergency meeting late on Wednesday, in a bid to prevent a deep recession that threatened to outdo the 2008-09 global financial crisis.

“Extraordinary times require extraordinary action,” ECB President Christine Lagarde said, amid concerns that the strains from burgeoning crisis could eventually tear apart the eurozone as a single currency bloc.

In the United States, the Federal Reserve rolled out its third emergency credit program in two days, aimed at keeping the $3.8 trillion money market mutual fund industry functioning if investors made rapid withdrawals.

On Sunday, the Fed slashed interest rates to near zero and pledged hundreds of billions of dollars in asset purchases, while President Donald Trump’s administration drew up a $1 trillion stimulus and rescue proposal.

U.S. infections were closing in on 8,000, with the death toll climbing to at least 151. Millions of Americans were staying at home.

The desperate state of industry was writ large in Detroit, where the big three automakers – Ford Motor Co (F.N), General Motors Co (GM.N) and Fiat Chrysler Automobiles NV (FCHA.MI) (FCAU.N) – confirmed they would be shutting U.S. plants, as well as factories in Canada and Mexico.

The United Kingdom was bracing for the virtual shut down of London as underground train stations across the capital closed and Prime Minister Boris Johnson mulled tougher measures to slow the contagion, with schools set to shut on Friday.

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