2008-10-24 02 h 39 :: economicnews.ca :: "Indispensable" to Get Interbank Market Running, Says Bank of Finland's Hakkarainen

http://www.economicnews.ca/cepnews/wire/article/145320

"Indispensable" to Get Interbank Market Running, Says Bank of Finland's Hakkarainen
Fri Oct 24, 2008 02:39am

(CEP News) Frankfurt - Bank of Finland Deputy Governor Pentti Hakkarainen said interbank liquidity in Europe is still frozen and that it is "indispensable" to get those markets up and running again.

However, capital injections by central banks, as well as bank loan guarantees will "help thaw the ice", Hakkarainen said.

He also said that Finnish banks are in a stronger position than banks elsewhere, noting that Finland is the only country in Northern Europe that hasn't had to put together a rescue package yet for its banks.

However, Finland has acted to save deposits at the Finnish branch of Iceland's Kaupthing Bank, which failed earlier in the month. According to the Finnish Financial Supervision Authority, Finnish banks have agreed to provide a loan to Kaupthing which will enable the Icelandic bank to repay the clients in Finland their deposits, along with interest earned.

On Friday, the Finnish Parliament is expected to vote on government guarantees that would prevent legal action stemming from this deal which, if passed, could enable depositors to get their money back in as little as a week.