As the economic situation in Europe continues to crumble, central banks from major economies worldwide are on standby to prevent a credit crisis in the event that Sunday’s elections in Greece cause a trading frenzy.
“The central banks are preparing for coordinated action to provide liquidity,” a senior G20 aide said, according to CNBC News.
G20 summit leaders are scheduled to meet in Los Cabos, Mexico, on Monday and Tuesday, with the euro zone debt crisis at the top of the agenda. Leaders will be accompanied by a financial minister for advisory purposes, while the ministers, who normally maintain a low profile at the summits, are scheduled for a working dinner and lunch during the week.
An emergency conference of ministers from the Group of Seven may be held at the beginning of the week, depending on the severity of market response, with central bankers to join in by phone, CNBC News reports.
Should the market response merit action by the emergency response team, a statement would likely be a issued, signifying the team’s commitment to ensuring market stability. Currency swap lines would also be available, should worldwide investors rush to U.S. assets for safety. Central banks are also able to hold additional auctions in order to provide banks with short-term assets via repurchase agreements.