Even as the dollar is crashing and inflation in the United States is rampant, Federal Reserve officials have announced plans to flow dollars into banks in the European Union. The European Central Bank, which is to receive the largest amount, will in turn will extend the money to other major banks in EU member states, which are finding it increasingly difficult to raise funds from investors deeply concerned by the massive regional government's unstable economic climate.
Meanwhile, the planned participation of central banks across the globe in the scheme is now prompting some to ponder how these efforts will impact the drive for gold, as well as the future of the European economy. The Washington Post reports:
The initiative, which entails temporarily swapping dollars for foreign currencies, also involves the central banks of Britain, Switzerland and Japan, underlining the extent of international concern about Europe’s deteriorating financial system. By tapping the Fed for dollars, the other central banks are taking advantage of long-standing arrangements, first put in place four years ago at the outset of the global financial crisis to prevent bank lending from freezing up.
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