Monday, March 16, 2009

Bank of England warns tensions in banking system at fever pitch

Are we getting immune to these kind of messages?

Tensions in the financial system are approaching the fever pitch they reached before the collapse of Lehman Brothers last October, the Bank of England has warned.

Investors have restrained the amount they are willing to lend, banks have grown reluctant to entrust their cash to each other and levels of stress in the system have hit new peaks, according to the Bank's Quarterly Bulletin.

The Bank's chief economist, Spencer Dale, warns in the report, published today, that: "Against the background of a significant and synchronised weakening in international economic activity, market conditions generally remained strained. In particular, bank funding markets became more difficult again reflecting renewed concerns about the scale of potential credit losses and write-downs facing banks."