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Business Daily: Credit Crunch Two - The Sequel

Credit Crunch Two - The Sequel

26/09/2011

BBC World Service - Business Daily, Credit Crunch Two - The Sequel

The dangers of a second banking crisis: is a second credit crunch really a possibility?

Just when you thought it was safe to go back into the bank and ask for a loan, credit crunch two comes along. How close to a second crunch are we and why could this one be worse than the first?

For months the great and good of world finance have been demanding eurozone leaders come up with a comprehensive rescue plan. Now, finally, the contours of just such a plan are begining to emerge.  

The key is likely to be a massive boost to the eurozone's ability to provide bailout funds - up to as much as two trillion euros, according to some reports. Enough money, eurozone leaders hope, to reassure nervous financial markets.  

So why now?  

In recent weeks concern has grown about inter-bank lending. Inter-bank lending was a the centre of the credit credit crunch that pitched the world into crisis in the first place.  

Once again banks just aren't lending to each other in the volumes they usually do, which raises the prospect of "credit crunch two".

And, like any Hollywood sequel, we're being told that this second credit crunch will be bigger and more frightening than the first. So, how shakey are European banks and will two thousand billion Euros be enough?  

Justin Rowlatt interviews Jeremy Stretch from Canadian Bank CIBC.

Jonty Bloom investigates whether the German banking system could provide a model for other countries and Lucy Kellaway asks whether anyone should bother to go to a company annual general meeting.

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