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analyze figure 5 as an evidence of RBA influence FI's interest rate The RBA and the global financial crisis 6 From mid. 2007 through to

analyze figure 5 as an evidence of RBA influence FI's interest rate
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The RBA and the global financial crisis 6 From mid. 2007 through to late 2009, the RBA dramalicaly cul the cosh ide farget b leves not seen lor more than 25 yocrs (see Figure 5.1 ) in tesponse to a global decline in confidernce:underpinning the functioning of money matkees, as participants retained liquidity and quastioned the cred worthiness of other participants. A number of events higgered the need for this respanse. Pressure in the money markets became evident. In August 2007 when a Fiench bank suspended redemplicrs from hoo of is funch becoue of the difficulity in valuing assots. Following this the spread over the expecied cash tote target rose above hisiorical levels in reflecting higher credil risk and liquidity risk. While the spreods in Aushalia were lower than those in Europe and the US, there was a high dogree of comovement ocross the differert currencies. Further pressure increased and peaked with the near collapte of the US bark. Bear Slearns in March 200B. Resolution of the Becr Siearns crisis led to a reduction in pressure on the makests unti Septomber 2008, when tensions armplified following the collopse of the US invesiment bank, Lehman Brothers. Spreods in Austolia at that time poaked at 100 basis points, which, although high, were for less than fhose in the US for evample, which peoked at 400 basis points. from August 2007 to June 2009 , the Australian threemonth spreod averogod 45 basis points, subsitanhaly abche the 58 bosis points which pievailed prior to that period (see frst pansel in groph belowl. Reserve Bank open market operations - E5 balanci The RBA and the global financial crisis 6 From mid. 2007 through to late 2009, the RBA dramalicaly cul the cosh ide farget b leves not seen lor more than 25 yocrs (see Figure 5.1 ) in tesponse to a global decline in confidernce:underpinning the functioning of money matkees, as participants retained liquidity and quastioned the cred worthiness of other participants. A number of events higgered the need for this respanse. Pressure in the money markets became evident. In August 2007 when a Fiench bank suspended redemplicrs from hoo of is funch becoue of the difficulity in valuing assots. Following this the spread over the expecied cash tote target rose above hisiorical levels in reflecting higher credil risk and liquidity risk. While the spreods in Aushalia were lower than those in Europe and the US, there was a high dogree of comovement ocross the differert currencies. Further pressure increased and peaked with the near collapte of the US bark. Bear Slearns in March 200B. Resolution of the Becr Siearns crisis led to a reduction in pressure on the makests unti Septomber 2008, when tensions armplified following the collopse of the US invesiment bank, Lehman Brothers. Spreods in Austolia at that time poaked at 100 basis points, which, although high, were for less than fhose in the US for evample, which peoked at 400 basis points. from August 2007 to June 2009 , the Australian threemonth spreod averogod 45 basis points, subsitanhaly abche the 58 bosis points which pievailed prior to that period (see frst pansel in groph belowl. Reserve Bank open market operations - E5 balanci

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