The Fed, ECB, BoJ, and Swiss National Bank have just agreed to provide dollars to European banks and businesses. This is interesting, in light of the incipient crisis that is evidently brewing in the French banking system, with BNP officials revealing last week that they could no longer obtain financing in dollars and were potentially facing a liquidity crisis. However, I note in the Journal story that this will consist of three rounds of liquidity tenders on October 12, November 9, and December 7.
How exactly does this help a bank locked out of overnight funding? Sure, it’s a gesture of support…but now if you’re worried about a French bank collapsing, you know the cavalry isn’t riding in for a month.