It is the lack of trust among the banks themselves. Unless trust in the solvency of banks is re-established, there is hardly any chance that conditions in the money market will normalise. As already mentioned, financing conditions have not eased exactly in line with key ECB interest rates. So will key ECB interest rates have to be cut to even lower levels?
In principle, even after last Thursday’s decision the ECB could still contribute to easing credit conditions by cutting its key interest rates further. But this will not fundamentally solve the problems that have caused the financial crisis. The contrary could be the case. If maintained for an extended period of time, too low or very low interest rates might in fact aggravate them.