With the SEC money market fund rules taking effect this Friday and the Libor up sharply, fund managers are reportedly beginning to see lending to European banks as too much of a risk. The bigger worry is this pullback has the potential to lead to another credit crunch like the one that nearly crippled the capital markets in 2008.

Already, the rates that European banks are paying for three-month commercial paper have risen to the 0.60%-0.70% range, up from 0.15%-0.20%, said Amitabh Arora, head of U.S. rates strategy at Citigroup. Anything longer than a month is commanding a premium, Arora told The Wall Street Journal.

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