Commentary: A decade on, ECB's bold credit crunch fix looks quaint

Ten years ago to the day, the European Central Bank pumped 95 billion euros into the banking system to prevent it from seizing up, marking the start of the global credit crisis. 

At the time it was the biggest ever injection of funds into financial markets and probably the most stunning single central bank action to date. It was also the first step taken by any major authority to tackle the unfolding credit crunch. 

It was a bold and decisive step which pointed to a nimble, flexible and forward-looking central bank. Yet it was also a conventional move and one that wasn't followed up quickly enough with other measures. 

Though the ECB was rightly seen as the vanguard of crisis prevention back then, it soon fell in the slipstream of other central banks -- notably the Federal Reserve and Bank of England -- who adopted much more aggressive and unconventional policies as the crisis unfolded. 

As Steven Englander at Rafiki Capital Management notes, then-president Jean-Claude Trichet's ECB was fulfilling its role as the traditional lender of last resort to a banking system in distress. It used liquidity provisions to ease financial tensions. 

These tensions suddenly appeared on Aug. 9, 2007, when French bank BNP Paribas shut off access to three mortgage-related funds. It was the clearest sign to date that the financial system was malfunctioning and by common consensus was the start of the global crisis. 

At the time, 95 billion euros was an astronomical sum which many observers believed would unblock the global money markets through which trillions of dollars of interbank lending flows and upon which the world economy and financial system is built. 

Yet what seemed like a prescient, intuitive action exactly a decade ago merely became part of patchier, more hesitant response over the following years of turmoil. 

That more muddled navigation was encapsulated best by a premature interest rate rise just months before the Lehman Brothers collapse in 2008 and also an inability to contain the early wildfires of the euro debt crisis in 2010 and 2011 - at least not until ECB President Mario Draghi's dramatic intervention in mid-2012.