Crisis 2.0 coming ? US$ funding hard to get...

Bank of England today offered unlimited US$ funding:

24-nov-2010

BOE: The Bank Of England said Wednesday it was offering an unlimited
supply of U.S. dollars in a 6-day repo operation, settlement date 26
 November maturing Dec 2 2010. The Bank said the repo would be at a
fixed-rate, with the rate to be set at 1.19%.

• This is key as... it indicates serious issues getting funding in US dollar similar to 2008.
• The interbank market is B+S EUR vs USD to create US dollar funding .....in 9-12 month tenor.... 1y up 8-10 basis point last two days
• The coming IMM DEC roll can also create funding issue... plus ..
• MRO will also be under pressure..(ECB Monetary policy instruments)
• ECB continues to talk exit strategy
• Year-end Funding...

In other words keep keen eye on FX fwds - banking going into the FX FWDS to create US funding is serious risk indicator...

Excellent paper on funding crisis and fx fwds: Financial crisis, global conditions, and regime changes