Greenspan put, Euro Central Bank put
There was a lot of talk about a Greenspan put and whether Bernanke and the FOMC would continue it, or whether they were trying to take it away by holding firm on rates. Whatever the state of that "put" we know now that there is an ECB put for sure, given how quickly the ECB intervened to fend off what it perceived to be a problem. That the ECB flooded the market with liquidity is both interesting, and understandable, given that the ECB doesn't have Lender of Last Resort (LLR) powers.
What should have happened (and this is still a missing piece of information) under the current arrangements within the European system of central banks is that BNP, or any other bank experiencing a liquidity problem, should have had access to its respective central bank's Lombard facility. But the ECB stepped in ahead of the national central banks. The ECB does have the authority to provide liquidity, but doesn't have systemic risk responsibility, except for payments system stability. The event points out how important it is for the ECB to have its LLR powers clearly defined, and there is a need to ensure coordination across the two functions.
-- Robert Eisenbeis, via WSJ.