Fed official: European crisis shows vulnerability

By JEANNINE AVERSA AP Economics Writer

WASHINGTON (AP) - A Federal Reserve official says that while financial conditions in the United States have improved since the 2008 crisis, events in Europe show their fragile underside.

Vice Chairman Donald Kohn in remarks prepared for delivery in Canada says: "The funding markets evidently remain somewhat vulnerable" given the debt crisis in Europe.

He says that's why the Fed revived a program with other central banks on Sunday to swap currencies. The Fed is lending much-in-demand dollars to other central banks. In turn, they can lend the dollars out to banks in their home countries to prevent the crisis from spreading further.