The European Central Bank put nearly half a trillion euros on offer, and euro zone banks fell over themselves to grab as much of the cheap finance as possible.
More than 500 banks grasped at the record offer, aimed at guaranteeing liquidity with little sign of an end to the two-year debt crisis.
Some analysts now believe the risk of a credit crunch has been cut considerably.
Justin Urquhart-Stewart of Seven Investment Management said: “It is fascinating to see how this has been offered. It almost can be seen as being an offer of cash for trash, if banks are going out there to be encouraged to buy up other assets or even only just to shore themselves up. No, no, now is the time for banks to come out with a clear message that they are as strong as possible.”
The 489-billion euros is the most the European Central Bank has ever pumped into the financial system.
For some the handout’s effectiveness remains uncertain. Charles Diebel, Head of Market Strategy at Lloyds Bank said: “It doesn’t solve the fact that you have a long-term plan for fiscal union and all of the haggling and the political issues that go with that – that’s the real long-term story.”
One hope was that the money would be used by the banks to buy government bonds in the hardest hit countries like Italy and Spain – something the French president would like to see.
However, Italy’s banking association said banks will not increase their explosure to sovereign debt because European rules discourage it.
Some analysts believe it is down to the ECB to buy more government bonds directly.