The Financial Times writes "US money market blow for eurozone". It says, "US money market funds say they cut their exposure to eurozone banks for a second consecutive month in August, reducing the availability of credit as the stress in the region's banking system increasingly affects stronger countries such as France. Some money market funds, historically essential providers of short-term financing to European banks, have begun to avoid French institutions entirely, while other money market fund managers say they are "de-emphasising" the country's banks. One head described the process as the "ongoing diversification out of core Europe into the Nordic, Canadian and Japanese banks", adding that money market lending to banks in the peripheral countries, and to Spain and Italy, had in effect ceased." The FT quotes Peter Yi, director of short-term fixed income at Northern Trust, "Exposures have fallen dramatically, even from a month ago." The FT added, "In a presentation to debt investors last week, Societe Generale reported that its short-term funding dropped E19bn ($27bn) to E53bn in the first half of August as money market funds pulled back. The bank also described its short-term funding sources as 'well diversified', with abundant forms of euro-based liquidity available."
