Stocks soared after the U.S. Federal Reserve and other major central banks agreed to make it easier to borrow dollars overseas, in a bid to ease the fallout of the European debt crisis. The move came as European finance ministers delayed key decisions for resolving the European debt crisis.
The pressure is on for European leaders to deliver a plan next week to fix the eurozone crisis, after their finance ministers failed to do so at a meeting in Brussels. European Economic Commissioner Olli Rehn underscored the sense of urgency as he spoke to reporters on Wednesday.
"Overall, I could say that we are now entering the critical period of 10 days to complete and conclude the crisis response over the European Union," said Rehn. "And we have to continue to work especially on two fronts, both in order to ensure that we have a sufficiently credible financial firewall to contain market turbulence. And at the same time, we need to reinforce our economic governance."
The 10-day deadline is pegged to the December 8 summit of European heads of state and government. It will cap one of the European Union's bleakest years. 2010 has brought a spreading financial crisis to the 17 nations sharing the euro currency, bringing down several governments and weakening many banks.
Analysts and officials point to many causes. For Dutch Finance Minister Jan Kees de Jager, the problem is lack of fiscal discipline on the part of some eurozone nations. "Lack of economic reforms and lack of fiscal discipline has brought us into this crisis. So you also have to address these fundamental issues," said de Jager.
Finance ministers did give Greece another, much-needed installment of bailout money during their two-day meeting that ended Wednesday. But they failed to move on doubling the larger European rescue fund to more than a trillion dollars.
Despite the lack of strong EU action, financial markets soared after major central banks announced they would slash the costs for foreign banks to borrow U.S. dollars. The eurozone crisis has spawned a credit crunch, leaving many financial institutions struggling to borrow the money they need to fund their operations.
