The forced marriage of UBS and Credit Suisse, consummated over the weekend, as well as the concerted intervention of five central banks, including that of Canada, to increase the availability of American dollars seem to have had the desired effect on major financial markets, at least temporarily.

European stock markets, which had opened lower, ended the day in positive territory in Paris (1.27%), London (0.93%), Milan (1.54%) and Frankfurt (1.12%). The title of UBS, which finally had to accept a forced merger with Credit Suisse, lost 15% of its value at the start of the session, but ended up up 1.27%.

The clouds seem to have dissipated a little over the financial sector, but they have not disappeared. After market close, the rating agency S

The Swiss financial giant will get even bigger with the purchase of Credit Suisse for the equivalent of US$3 billion, raising concerns in Europe.

On this side of the Atlantic, the New York and Toronto stock exchanges have digested the events of the weekend well. The Dow Jones rose 1.2%, the NASDAQ index gained 0.4% and the broader S

In Toronto, the S

As the Swiss authorities rushed to arrange the marriage between UBS and Credit Suisse in time for the opening of the Asian markets, on the night of Sunday to Monday, the central banks of the United States, Canada, Japan , England and the European Central Bank announced that they were making US dollar funding available every day until at least the end of April.

Central bankers, who are the banks of commercial banks, want above all to reassure the markets, explains David Dupuis, professor at the University of Sherbrooke and specialist in monetary policy. “It’s not so much the measurement that’s important as the message it conveys, which is: we’re here,” he says.

These swap agreements between major central banks already exist and are normally available to commercial banks on a weekly basis. They are now available every day, much like a convenience store that opens once a week and becomes open every day.

The objective of central banks is to prevent the supply of credit from tightening for households and businesses and ultimately affecting all economic activity. The extension of swap agreements is primarily aimed at European banks, since Canadian banks that have mostly operations in the United States have other channels for exchange. Also, Canadian banks are “drowned in reserves”, points out David Dupuis.

According to him, the monetary authorities learned from the financial crisis of 2008 and decided this time to act quickly and a lot to prevent the problems of Silicon Valley Bank (SVB) and First Republic Bank in the United States , and those of Credit Suisse in Europe, contaminate the entire financial system. “They do more than the customer asks for,” he says.

Thus, the FDIC, the US federal agency responsible for deposit protection, has decided to reimburse all SVB depositors, even if its obligations are limited to deposits of US$250,000 and less.

Similarly, in their rush to find a solution to Credit Suisse’s problems, the Swiss monetary authorities have favored Credit Suisse shareholders over holders of so-called AT1 (Additional Tier 1) debt securities, which are counted as equity. form the bank. These investors are expected to bear US$17 billion in losses, while normally riskier Credit Suisse shareholders will receive shares of UBS. This unexpected change in the rules of the game in force in the financial system since the 2008 crisis is far from pleasing everyone.