With the
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
“Obviously, with conditions in the euro zone as they are, we’ve taken a second and third look at our exposures over there and adjusted our portfolio where appropriate,” notes David Glocke, manager of
The SEC is now requiring money funds to hold more liquid, higher quality paper and shorten the average maturity of the funds’ portfolios from 90 to 60 days.
Meanwhile, some U.S. banks are questioning whether they should depend on Libor — the influential composite of short-term borrowing costs for some of the world's largest banks — as a peg for domestic loans. Some industry experts wonder how accurate the index actually is, in light of the growing European debt crisis.
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