EU sees central banks’ intervention calming markets

BRUSSELS, Aug 13, 2007 (AFP) – The emergency action taken by central banks, injecting money into the banking system, appears to have had the desired effect of calming down the financial markets, the European Commission said Monday. “We are following developments. We do note that markets appear to have calmed,” said Maximilian Strotmann, spokesman for the EU’s executive arm.

“It would appear that the actions that have been undertaken have had the desired impact,” he added, stressing that the Commission was continuing to monitor the situation.

US home loan woes caused more turmoil on world markets last Friday.

Central banks across the world responded by pumping tens of billions of dollars into the banking system, offering loans at lower rates to commercial banks to forestall a credit crunch that could damage economic growth.

The European Central Bank on Monday pumped another 47.66 billion euros (65.06 billion dollars) into the money market to address liquidity shortages amid growing fears about the US home loan sector.

The bank said earlier that the eurozone banking market was returning to normal after it injected a record 155.85 billion euros into the market over two days last week.

The bank, which set