Europe’s Money Markets Freeze as Crisis Escalates in Italy and Spain
August 3rd, 2011Via: Telegraph:
The European money markets have begun to seize up as pressure mounts on the Italian and Spanish banking systems, tracking the pattern seen during the build-up towards the financial crisis in 2008.
The three-month euribor/OIS spread, the fear gauge of credit markets, reached the highest level in two years today, jumping 7 basis points to 40 in wild trading.
“Europe’s money markets are undoubtedly starting to freeze up,” said Marc Ostwald from Monument Securites.
“It’s not as dramatic as pre-Lehman but it is alarming and shows the pervasive degree of fear in the markets. People are again refusing to lend except on a secured basis.”
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