The European Central Bank might have called it “fine-tuning” but its decision to inject nearly €95bn into the eurozone banking system, the largest such intervention since the September 11 2001 attacks, is anything but. Does the ECB know something the rest of the world does not? After all, the Federal Reserve on Tuesday gave no inkling that a systemic threat might arise from the stream of banks and funds confessing to subprime-related problems – BNP Paribas being the latest on Thursday.

In fact, the ECB is reacting, almost mechanistically, to a rise in the market overnight interest rate. Normally ECB policymakers decide their target base rate – now 4 per cent. The ECB then transmits this into the money markets through weekly open market operations. These involve fixing the amount it will lend to participating banks at a level that ensures the market interest rate is consistent with the target rate – about €300bn weekly, so far this year. The banks in turn lend much of this into the market, making a turn of, say, 5-10 basis points.