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The timing of the coordinated action by 6 central banks to ease cut the rate for dollar swaps was no coincidence: the amount of US dollars that the ECB supplied to European banks jumped and reached $1.6 billion in 7 day operations, and more than $50 billion in 84 day operations, to which 34 banks tapped in.

This shows how more European banks were starved for dollars, and how serious the situation has become.

There was usually one bank accessing a small sum of $500 million, and in recent weeks, the total sum was a bit higher and included more banks, yet it didn’t pass $600 billion. It even fell last week to $352 million.

$1.6 billion is still a small sum for the weekly operations, but the jump goes to show that the situation is deteriorating, and that a quick escalation to a full scale credit crunch could happen anytime.

The $50 billion in 84 day operations is 5 times more than the estimate made by Reuters, and this is scary as well. No less than 34 banks used this cheap money, at a rate of 0.59%.

A total of 5 European banks accessed the ECB’s dollar funding and paid a cheap price: 0.58%. This is around 50 basis points lower than last week, thanks to the coordinated central bank action, conducted by the ECB, the Federal Reserve and 4 other central banks.

Last time, there were only 2 banks seeking dollar funding from the ECB.

The euro is still holding up in range, awaiting the rate decision tomorrow, and more importantly, the result of the EU summit on Friday. Merkel and Sarkozy announced an agreement, but this lacked details, and the euro-rally was short lived.