Europe's debt crisis is drying up liquidity across the globe, threatening to trigger a credit crunch, market executives and fund managers said. Traders are paying record prices for credit default swaps on European bank debt. Last week, worldwide corporate-bond issuance plummeted to $9.4 billion, the lowest figure this year. "There is a concern the market may be ceasing to function, with government bond liquidity drying up completely as everyone looks to sell," said Mark Austen, managing director at the Association for Financial Markets in Europe.

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