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A bank approached the European Central Bank to borrow dollars in violation of a major lending taboo, according to FT Alphaville.Banks systematically approach the ECB to temporarily borrow euros, but avoid asking for dollars unless pressed to find a reasonable borrowing rate.
The bank — not named in the FT Alphaville report — borrowed $50 million for seven days at a rate of 110bps.
This could be a sign of increasing funding pressures in a budding credit crunch in the euro zone. This follows a Reuters report last week that an Asian bank cut credit lines to French banks.