Financial institutions move to address funding squeeze in Asia

European sovereign debt woes during the past quarter have heightened concerns about counterparty credit risk and led to a funding squeeze in arguably Asia’s most important currency – the US dollar. But some financial institutions with good credit ratings and strong sources of liquidity are profiting from the situation

The spectre of an imminent Greek sovereign default during the past quarter and a Chapter 11 bankruptcy filing by US broker MF Global on October 31, have contributed to risk aversion and a liquidity squeeze in the Asian markets. This has resulted in some banks and other institutions finding it difficult to source US dollars as well as some local currencies.

However, a number of financial institutions in the region with favourable liquidity positions and good credit ratings are turning the