The FT writes "US funds cut exposure to European banks". It says, "The largest US money market funds cut their exposure to European banks to another record low last month, intensifying concerns over a wholesale funding run on the region's banks and the potential for an ensuing credit crunch. The 10 biggest funds trimmed their short-term lending to European banks by 9 per cent on a US dollar basis between the end of October and the end of September, according to new data from Fitch Ratings. That takes money funds' European bank exposure to 34.9 per cent of the funds' total assets of $642bn, down from 37.7 per cent of fund assets at the end of September." Robert Grossman, head of macro credit research at Fitch, tells the FT, "There are three fundamental ways to reduce risk: lower exposure, shorten maturities or increase collateral. All three of those strategies are at work here." See the full press release, "Fitch: Treasurys Largely Offset Decline in U.S. Money Fund Exposure to European Banks" here.

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