Editor's note: The U.S. Federal Reserve, acting with other nations' central banks, took steps Wednesday to support the global financial system with a coordinated plan to lower prices on dollar liquidity swaps beginning on December 5 and extending these swap arrangements to February 1, 2013. CNN's international business correspondent Richard Quest takes a look at how big of a help the plan is and what more might need to be done to ease the eurozone crisis.
It is time for a reality check on what was announced Wednesday morning.
In the highly complex world of banking, this move to ease access to dollars is the equivalent of adding oil and grease to the wheels of the system. The banks are lending and borrowing from each other on an hourly basis, frequently in foreign currencies. In recent weeks, it has been more difficult to get hold of currencies as a crisis of confidence takes its toll.
The so-called swap lines (where one central bank borrows foreign currency from another) have been around since May 2010. Today they have eased the price at which that money is lent to banks, and they have made it easier to borrow across the range of currencies. For instance, a bank in Frankfurt, Germany, needing yen can get it more quickly; the Swiss can get dollars; and the Japanese can get euros and so on.
This will all make it easier for banks to get on with the daily business of lending between each other - it greases the wheels - but it does not address the fundamental problems of the eurozone.
I don't see any moral hazard issue (a term in economic theory for a situation where there's an incentive to share a risk) in this announcement. They are not saying the banks are too big to fail - they are saying the system is too fragile to seize up. It is a sensible, moderate and proportionate response. What is lacking from the Europeans is a credible, long-term solution to the crisis. And from the Americans, a long-term solution to the debt debacle. Only when these are solved will there be the remote possibility of business as normal.
Olli Rehn, the European commissioner for economic and monetary affairs, said Wednesday that we are entering a critical period of 10 days to complete and conclude the crisis response of the European Union - its very own 10 Days of Christmas.
And each day I will write about what the gift or groan is for that day.
Start the clock.