The world's financial system showed new
signs of strain as banks and investors
clamored for U.S. dollars and two European
banks took emergency steps to address the
crisis.
Stresses rippled through debt and stock
markets despite measures taken by Euro
leaders to help restore investor
confidence.
European banks are seeking dollars to
fund US operations and dollar-denominated
loans. Demand surged for the European
Central Bank's seven day fixed rate
dollar funding. The ECB said that it
alloted $5,122 billion. The cost of
borrowing dollars for three months in
the London Interbank market rose
steadily. Costs of borrowing dollars
in those markets are now at their
highest levels since July 2009
Deposits at foreign-owned banks and
US branches of foreign banks have
fallen 20% since May to a recent
$877 billion. That's a sign that
customers are moving their money
elsewhere.
