Central Bankers Gird for Next Rounds of Bailouts…and Next Round After That

The world’s central bankers are gearing up to provide liquidity in the event that Greek elections Sunday cause a free fall in markets, Reuters is reporting, and you know, again (and again) after that.

It was only this weekend, of course, that a plan to rescue the Spanish banking system with $125 billion in European funds, news that soothed investors for about five minutes before markets turned back again Spain’s government bonds.

With the possibility that the Greek elections Sunday could install the anti-bailout Syriza party in control of the government, a G20 official told Reuters that “the central banks are preparing for coordinated action to provide liquidity”:

Wall Street stocks jumped sharply on the news, with the S&P 500 and the Dow Industrials both up more than 1 percent. The euro added to gains and U.S. government debt prices fell, boosting yields.

Separately on Thursday, British finance minister George Osborne said the government and the Bank of England will act together with new monetary policy tools to tackle tightening credit and financial market conditions triggered by the euro zone crisis.

Not that said actions would likely be the last, Reuters points out:

A senior U.S. official cautioned that the Greek election will not provide “the definitive signal on what happens next” in the euro zone debt crisis.”