Mario Draghi, ECB President, may have saved the day.
In late December the European Central Bank, under the guidance of its new president Mario Draghi, quietly began providing emergency loans to European banks — hundreds of billions of dollars of almost interest-free capital that the banks have used to come to the rescue of their national governments.
As a result of the ECB's incentives, financial markets in Asia, Europe and the United States have responded with strong gains this year as investors seem convinced that a solution to the debt crisis may be at hand. Fears of a bank collapse — the so-called Lehman Brothers moment, when one financial institution’s failure threatens the stability of the entire system — have subsided. And Greece appears to be closer to a deal with its creditors to pare back its debt obligations rather than a disorderly default that could plunge the financial system back into chaos.
What has Mario Draghi done to give investors the idea that the euro crisis may be turning the corner? Read Nicholas Kulish's account in the NY Times.