The European Central Bank pumped into the banking system a record €442.24 billion in 12-month loans at a rate of 1.0% in an effort to restore the flow of credit throughout the region. The move came just hours before the Federal Reserve announced it would not be adding to its lending program. The so-called "stimulus by stealth" directly benefited 1,121 banks, according to one Goldman Sachs economist.
Liquidity easing this morning also comes as the ECB has vowed to avoid quantitative easing measure similar to that of the Federal Reserve. Indeed, this action is somewhat different. Whereas the Fed took various agency-debt securities as collateral for such loans, the ECB only took 12-month government issued debt.
During the European trading session the U.S. Dollar rallied from a low of 1.4137 against the Euro up to a high of 1.3887 or as much as 1.77% over an 11 hour period.
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