WASHINGTON — After months of quietly watching from the sidelines, the United States finally intervened in the European debt crisis on Sunday night.
The Federal Reserve announced that it would open currency swap lines with the European Central Bank — in essence, printing dollars and exchanging them for euros to provide some liquidity for European money markets and banks.
The step came after a hectic week in which Washington began to fear that the sovereign debt crisis threatened to infect the American economy and hamper its recovery, according to several United States officials.
The intervention, which also involves the central banks of England, Switzerland, Canada and Japan, is part of a colossal package intended to quell the restive credit markets with a show of force and resolve that American policymakers had quietly believed was lacking. The package has two other elements: about $950 billion in loan guarantees from the European Union, and a decision by the European Central Bank to intervene in the bond markets through a series of refinancing operations.
An initial rescue package for Greece, totaling around $140 billion, failed to calm investors last week. The sudden plunge in the stock market on Thursday exacerbated the worries of American officials.
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