The European Central Bank pulled out some of its arsenal today, lowering its benchmark lending rate to 1% and “relaxing” collateral standards for lending to banks. This action highlights the dichotomy between what measures elites will proffer to banks versus what they will give to the people of the affected countries on the European periphery, who had nothing to do with the lending decisions that caused the crisis, certainly not as much as the banks did.

Here’s the list of what ECB chair Mario Draghi announced today:

The Frankfurt-based lender said it would cut interest rates for the second time in two months; make three-year loans to cash-strapped banks; and accept a far wider range of collateral, including mortgage-backed securities and other A-rated assets, in exchange for emergency loans.

Individual central banks within the eurozone will also be allowed to accept bank loans in exchange for liquidity, at their own risk.

Explaining the ECB’s decisions at his regular press conference, Draghi said tensions in financial markets presented the greatest risk to Europe’s economy.

“Intensified financial tensions are continuing to dampen the economic outlook,” he warned.

This mainly attacks a liquidity crisis among European banks by making lending easier. I’m sure everyone in the Eurozone would like their collateral “relaxed,” but only the banks will get that free-money privilege.

As FT Alphaville notes, the ECB has more steps they can take. But certainly they’re showing a little leg with this move. If we have merely a liquidity crisis, the ECB’s actions, combined with the coordinated actions of several central banks last week, should do the trick. If it’s an insolvency crisis for banks, and a growth crisis for the bulk of the Eurozone, then this gets us no closer to a solution. It certainly doesn’t come close to printing more money, which apparently may be needed sooner rather than later.

Certainly, some of the central banks in the Eurozone are not taking any chances. They are preparing for life without the euro.

Some central banks in Europe have started weighing contingency plans to prepare for the possibility that countries leave the euro zone or the currency union breaks apart entirely, according to people familiar with the matter.

The first signs are surfacing that central banks are thinking about how to resuscitate currencies based on bank notes that haven’t been printed since the first euros went into circulation in January 2002 [...]

The fact central bankers are even studying the possibility, which until this fall was considered unthinkable, underscores how swiftly conditions have deteriorated…

J.P. Morgan Chase & Co. put out a report Wednesday that advised investors and companies to hedge against a collapse of the euro zone—though the bank said the likelihood of that happening was just 20%. It said many corporate clients were buying currency derivatives to place bets against the euro.

This undercuts the sense of optimism that European leaders want to project as the Germany-France “deal” on fiscal consolidation comes to the fore, and the ECB lets out a little ammo. The disconnect is pretty striking. You can make it as easy for banks to lend as you want, and come up with all sorts of punishments for failing to reach budget targets. At least some of the planners in Europe recognize these actions as folly, unrelated to the actual crisis at hand.

UPDATE: Draghi’s words at a press conference announcing the move undermined the investor confidence he attempted to provide. He said that the ECB “has never discussed setting limits for bond yields or bond spreads for euro-zone debt.” This is what most people mean by saying that the ECB should step up as the lender of last resort. Bond yields in Italy and Spain are rising.

UPDATE II: Here’s what the cliff-dive on the euro has looked like, from the moment Draghi started speaking.