The Bankwatch

Tracking the consumer evolution of financial services

2008 Banking redux

This paragraph within an FT article tonight caught my attention. This is directly reminiscent of 2008 when a French Real Estate Fund froze redemptions.

On Tuesday, the pound shed 2 per cent after a handful of large UK commercial property funds froze redemptions by clients, stoking concerns the fallout from last month’s vote in favour of leaving the EU was gathering pace.

The “froze redemption” link goes to this:

Investors have been barred from cashing in their assets in two more big commercial property funds amid widespread disposals of UK assets on fears that the economic fallout from last month’s vote to leave the EU was gathering pace.

Not good. Liquidity is a given in markets, and Sept 2008 looms large. The world economy came to a stop on Sept 15th 2008 when no bank would transact with another bank for bank to bank liquidity transactions. Inter Bank trust broke down that day.
This is why the BoE is making extraordinary amounts of liquidity available but watch for other Central Banks to do the same.

Written by Colin Henderson

July 5, 2016 at 18:52

Posted in Uncategorized

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