Euro Money Market Stress Indicator Reaches 2 1/2 Year High
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The Euribor-OIS spread, a measure of banks’ willingness to lend to each other, reached the widest level in 2 1/2 years, a sign of mounting financial-market tension in the euro area.
The spread widened to 83 basis points at 5:43 p.m. in London, the highest level since March 2009 and up from 74.95 basis points yesterday. The difference widened as the yield on forward contracts based on the euro overnight index average, or Eonia, slid 7.4 basis points to 0.7085 percent after the European Central Bank signaled yesterday it may take further steps to fend off the region’s debt crisis.