Europe’s Money Markets Prepare for World Without Unlimited Cash
- Key gauge of funding conditions rises to highest since October
- ING says increase shows market is pricing drop in liquidity
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A key gauge of funding conditions in Europe suggests money markets are pricing in an eventual end to the region’s unprecedented liquidity glut.
The premium banks pay to pocket the spread between three-month and overnight cash in two years’ time, rather than September, has climbed to six basis points. That’s triple the equivalent level back in February and up from a low of around minus 15 basis points during the depths of the coronavirus crisis last year.