Outlook Yesterday's joint intervention by the world's central banks may have lit a rocket under world stock markets, but we should see it for what it really was: an admission from central bankers that another credit crunch is upon us. Moreover, this intervention addressed the symptoms of the sickness in Europe's funding markets rather than the cause.
It has been apparent for some months now that many of Europe's banks have been finding it ever harder to fund their day-to-day activities via traditional inter-bank channels. In a climate of fear about sovereign debt defaults – and confusion about what individual banks' exposure to that debt might be –no one wants to be caught with an exposure to a stricken institution.
Only one thing will ease such anxieties for good: a convincing explanation of how the eurozone's leaders intend to ensure the current crisis is contained. After that we will need to see reforms across the single currency bloc to ensure we can't end up back in this position all over again.
Does the compromise stitched together yesterday on the European Financial Stability Fund satisfy that first requirement? Not really: at best, the fund now looks likely to have only half the €1 trillion firepower the eurozone was hoping for a few weeks back. That won't be enough for the potential demands of Italy – let alone Spain.
As for political reforms, we seem to be as far away from those as ever. No eurozone leader yet seems willing to make the case to his or her voters for handing over such a large portion of control over fiscal policy to the unelected centre.
None of which is to say the central bank intervention was a mistake. Quite the reverse in fact – it looks to have bought the eurozone some valuable time to mount a more coherent and compelling defence of the single currency project.
Note, however, that many parties will use that window of opportunity in a quite different way, with companies across Europe, including Britain's banks, now doing much more serious preparatory work on how to cope with the break-up of the euro.