ECB says wider credit squeeze possible

12/13/2007 | Financial Times (free content)

If the euro zone's largest banks have to move the €244 billion they have in off-balance sheet assets back onto their balance sheets, the situation could spur an economy-wide credit crunch, according to the European Central Bank. While the banks would remain solvent, such a move could increase the banks' funding costs, forcing them to seek new capital and cut payouts to investors.

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