"They get paid to borrow and then paid to deposit what they just borrowed. Anyone see a problem with this risk-free infinite money mechanism?" It's an exchange

"They get paid to borrow and then paid to deposit what they just borrowed. Anyone see a problem with this risk-free infinite money mechanism?" It's an exchange not a conversion, which means there has to be an equal and opposite flow in the other direction. Euros borrowed cannot be put on deposit at the Fed because the Fed uses dollars. So there has to be an exchange with somebody who had Fed dollar deposits, and wants Euro deposits.