More banks to tap ECB on dollar funding woes

<p> </p><p>It's looking increasingly likely more European banks will be forced to tap the European Central Bank's US dollar facility, as stress in the cross currency basis swap market has once again become acute this week. Few banks have opted to tap the ECB's dollar facility so far, but a combination of foreign investors continuing to shun European banks and swaps markets fast becoming prohibitively expensive may soon spur a larger drawdown at the ECB's weekly unlimited dollar auction. "We are more or less at levels where banks are indifferent about going to the ECB or the FX market for dollar funding. Over the last few days spreads have widened dramatically in the FX market, making dollar funding more expensive. As a result, banks may well want to start tapping the ECB dollar facility more," said Pavan Wadhwa, global head of rates strategy at JP Morgan.</p>

More banks to tap ECB on dollar funding woes

  It's looking increasingly likely more European banks will be forced to tap the European Central Bank's US dollar facility, as stre...

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