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User Info Aooooooga! Aooooooga!; entered at 2018-10-11 08:14:26
Posts: 2314
Registered: 2008-02-15 New Castle, PA 16101
I think this is a "poke in the wrong place.":

The whole article is a great read
but this blew my mind ($12 Trillion borrowing by EU banks from American Banks!):

As the credit of European banks deteriorates, US regulators require American banks who lend to them to put up more reserves against their exposure. That raises the cost of refinancing the $12 trillion or so of European bank borrowings from American banks, and it probably has led to a reduction in credit lines. European banks, in return, have to charge exorbitant rates to customers for hedging.

The crunch hit at the end of the third quarter, when European banks short-term credit line in US dollars had to be renewed. Data for the volume of interbank lending arent available yet, but the cross-currency basis swap between Euros and US dollars the spread that banks charge their customers for expanding their balance sheets to provide foreign exchange hedges suddenly widened.
2018-10-11 08:14:26