Just a week after warning that euro zone banks will probably have to write off another $280 billion in bad loans and toxic assets over the next 18 months, the European Central Bank has ridden to their rescue by pouring more than double that amount into bank coffers at a bargain-basement rate of just 1 percent.

More than a thousand banks rushed to take up the ECB’s limited-time-only offer of unlimited funds for one year at a fixed interest rate, and will receive a total of 442 billion euros, or $613 billion – the most the ECB has ever lent out in a single operation. 

“We are drowning in money,” a trader at one euro-zone bank said. Goldman Sachs estimated the funds equate to 1,300 euros per man, woman and child in the 16-nation region. 

The central bank is hoping banks will lend the funds on to those men, women and children, as well as other banks and businesses, to bring down the cost of money, encourage spending and shake the region out of a persistent recession.  Money market rates have already fallen to record lows as the ECB has slashed its interest rates, but longer-term liquidity is still scant.

The ECB’s efforts will come to nothing if banks sit on the cash instead of lending it on, or fail to spark consumer demand for credit - so the ECB is betting that spend, spend, spend will light the way out of the downturn.