... but the markets are reacting like it's a major sugar rush.
The European Central Bank, U.S. Federal Reserve, the Bank of England and the central banks of Canada, Japan, and Switzerland are all taking part in the operation, which is designed to "enhance their capacity to provide liquidity support to the global financial system."Yay! We're saved! The loans are all paid off and ... wait a minute. Nothing happened.
The ECB said in a statement the central banks were making it cheaper for banks to get U.S. dollar liquidity when they need it, starting next Monday. They are also taking steps to ensure banks can get ready money in any currency if market conditions warrant by establishing a temporary network of reciprocal swap lines.
The ECB said the central banks have agreed to reduce the cost of temporary dollar loans to banks — called liquidity swaps — by a half percentage point. The new, lower rate will be applied to all central bank operations starting on Monday.