Aggregate money market fund allocations to the rest of Europe declined moderately, Fitch said, with decreasing exposure to UK banks partially offset by increased allocations to Nordic banks.
Meanwhile, exposures to Japanese banks have doubled since May last year. With 12% of total fund assets, they are now at the highest level.
“Money fund disengagement stems from both ongoing risk aversion and heightened caution by some European banks and their regulators on using this potentially volatile form of funding,” said Robert Grossman, managing director, Fitch macro credit research.
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