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Doug Krizner: The Federal Reserve tried to calm jittery credit markets yesterday. They’re still jittery. The Fed and three European central banks pledged discounted loans to troubled financial firms. Well, stock markets initially applauded the move. Maybe this will help with the credit crunch. By the end of the day, they were less convinced.

Today in Lisbon, Portugal, European leaders are signing a new treaty creating a president for the E.U. But the buzz is about that plan from the central banks. That’s because Europe is facing its own economic challenges, as Megan Williams reports.

Megan Williams: With today’s signing, no longer will single E.U. countries be able to veto most policy decisions. The union will also get a long-term president and a foreign affairs head who will control a massive budget.

But for E.U. leaders, the pressing issue of the day remains the economy and how to weather the subprime crisis. That’s why they’ve lauded a plan by five central banks to lend about $110 billion to world money lenders. British Prime Minister Gordon Brown welcomed what he called new cooperation among the Federal Reserve, the Bank of England, the European Central Bank, and the central banks of Canada and Switzerland.

For Europe, which is facing rising inflation and low consumer confidence, the move is seen as a much-needed stop-gap, but not the final solution.

I’m Megan Williams for Marketplace.