BBC News
December 15, 2011
If, as I mentioned on Friday, the latest EU council has failed to solve the eurozone debt crisis in a sustainable way, what could shock eurozone governments into effective evasive action - or, in a worst case, be the explosion that causes the disintegration of the eurozone?
The most likely disaster would be a big bank - or banks - running out of money.
What do I mean by that, given that the European Central Bank is lending unlimited sums to eurozone banks, to replace the money that these banks are no longer able to borrow on markets in the normal way?
As you know, conventional dollar funding of eurozone banks has almost completely dried up - which is why the European Central Bank (and other major central banks) reached an agreement with the US Federal Reserve to borrow dollars, which the ECB then lends to eurozone banks that need the money (last week, the ECB lent more than $50bn to eurozone banks in 84-day loans).
And the ECB is also lending more and more euros to commercial eurozone banks.
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