Emergency help for financial markets has entered new territory with the European Central Bank. On Monday, the ECB announced that it would offer unlimited funds on a two-week basis at an interest rate of 4.21 per cent – significantly below the market rate before its statement.

Prior to the announcement, the cost of borrowing two-week money hit 4.9 per cent but it fell sharply afterwards as the ECB move in effect put a cap on market interest rate. The ECB said the move was “fully consistent” with its aim of keeping interest rates close to its main policy rate of 4 per cent.

ECB move was reminiscent of its operation on August 9, during the earlier stages of the credit squeeze. But that was only for overnight loans.