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Friday, December 16, 2011

Mother Of All Bank Runs Has Already Begun In Eurozone | Before It's News

Mother Of All Bank Runs Has Already Begun In Eurozone | Before It's News: Uncertainty over the future of the eurozone runs high, despite last week’s high-on-hot-air agreement on moving towards greater fiscal union. And that uncertainty is driving European banks into a severe liquidity crunch that could cause the region’s entire banking system to collapse, analysts fear.

The early warning signs of such a liquidity seizure are already showing up in the troubles that European banks face in raising short-term liquidity. French, Italian and Spanish banks have run out of collateral (typically US Treasures) that they put up to finance short-term loans, and have been forced to pledge their gold reserves in order to secure dollar funding, reports The Telegraph.

Some European banks have resorted to selling foreign assets to meet their capital requirements; others have cut back on their lending to industry.

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