Central bank action not solution to crisis: German minister
Coordinated action by global central banks to shore up the financial system is not a long-term solution to the eurozone's debt crisis, German Finance Minister Wolfgang Schaeuble said on Thursday.
"The main problem with the financial markets is that they mainly react late and in an exaggerated fashion. We saw a wonderful example of that in the markets yesterday," Schaeuble told reporters.
"No one, apart from a few media editors ... believes that the decision of the central banks represents the solution to the problem," he added.
In a surprise move on Wednesday, the European Central Bank, the US Federal Reserve and four other major central banks took action to ease financing strains for banks, sending markets worldwide sharply higher.
They said they were lowering the cost of an arrangement that allows commercial banks to borrow dollars from them, as well as extending the time frame of the operation.
Traders reacted with euphoria as it removed much of the immediate liquidity concerns over European banks, pushing the German market up by nearly five percent and sending Wall Street up by a similar amount.
But the news also underlined the precarious situation in the eurozone, as leaders still wrestle to come up with a comprehensive solution to the huge debt-and-deficit problems facing a number of countries.
© 2011 AFP