Central banks get ready just in case Greek elections Sunday lead to a flight to the U.S. dollar

06/14/2012 4:21 pm EST

Focus: STOCKS

Jim Jubak

Founder and Editor, JubakPicks.com

Reuters is reporting that global central banks are preparing for coordinated action if Sunday’s Greek elections set off chaos in the world’s financial markets.

Well, I should hope so.

If the major central banks didn’t have some agreed upon contingency plan in place, it would be amazing to me. It’s not like the date of the Greek elections is a big surprise or that the danger of a victory by a Greek coalition that wants to rip up the existing Greek bailout deal hasn’t been apparent since the last Greek election.

There is no reason that a Greek vote one way or the other should produce a market meltdown, but then bank runs aren’t logical either.

G20 officials told Reuters today “central banks are preparing for coordinated action to provide liquidity.” Central banks should have this drill down by now. One important measure is apparently already in place: central banks have put currency swap lines of credit in place to make sure that there are enough U.S. dollars available in case of any rush into that safe haven.

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