European Banks Head Toward New Funding Crunch

Europe's sovereign debt crisis is making it harder for European banks to get their hands on dollars and may require their central banks to step in with short-term liquidity to keep up the flow of money through Europe's economy.

Any liquidity crunch isn't likely to be as severe as it was in August 2007, however, because the biggest banks have been forced to bolster their pools of capital and liquid assets. Central banks now have emergency liquidity facilities standing by and ready to activate.

Despite a €110 billion ($138.92 billion) bailout package for Greece, concerns about lending to banks have re-emerged as worries about a looming Greek debt default—or bond restructuring—have spread to other countries, such as Portugal and Spain.

Read Full Article from Wall Street Journal

- Posted: 2010-05-07 10:28:27

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