Euro Money Markets Most Stressed Since 2012 on Deutsche Bank
- Stress in Europe comes amid new U.S. money market rules
- Central banks’ liquidity provision helps limit contagion
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Banks borrowing dollars are paying the most since the height of the euro region’s sovereign-debt crisis as concerns mount about the health of Germany’s largest lender, just as new money-market rules are disrupting U.S. short-term financing markets.
The three-month cross-currency basis swap, the rate for banks to convert euro payments into dollars, fell to 58 basis points, or 0.58 percentage point, below the euro interbank-offered rate. That’s the most negative reading on a closing basis since July 2012, when the debt crisis was seen threatening the very existence of the euro. It widened to 210 basis points below Euribor as banks refused to lend to one another in 2008 after the collapse of Lehman Brothers Holdings Inc.