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Kai Ryssdal: The big splashy economic news yesterday was that the Fed and the European Central Bank were going to team up to get more dollars into the European banking system. And that's great because lord knows they need the help.

But why? Why do they need dollars?

Our senior business correspondent Bob Moon follows the money.

Bob Moon: One of the ways many big European banks make their money is lending abroad. And banking consultant Bert Ely says around the world, the color of the currency of choice is green.

Bert Ely: The European banks in particular need dollars because many of their financial activities, and specifically credit, that they grant, is granted in dollars rather than in euros. And so, if they lend in dollars they need to borrow in dollars.

And they've usually gotten those dollars through money market mutual funds here in the U.S. But those investors are now nervous about parking their money in Europe. So the U.S. Federal Reserve is teaming with its European counterpart to provide greenbacks to needy banks.

Not to worry, says Ely -- the European Central Bank will doing the lending. It's swapping euros for dollars from the Fed and guaranteeing the Fed won't lose money.

Ely: These arrangements are done in such a way that there's no risk to taxpayers.

In fact, this program has existed since the 2008 financial crisis, only now the banks can borrow for longer than a week at a time, up to three months.

Christopher Rupkey is chief economist at Bank of Tokyo-Mitsubishi in New York. He points out dollar-lending in the past week has been far below the crisis levels of three years ago.

Christopher Rupkey: $500 billion was borrowed through these swap lines before, and now it's only $500 million. So we're nowhere even close to what the level of mistrust that we saw. It's kind of a confidence-building measure.

Confidence that European banks won't run short of cash and harm the global financial system and American companies doing business in Europe. Rupkey says this buys some time -- but it still doesn't solve Europe's underlying debt dilemma.

I'm Bob Moon for Marketplace.