Moody's warns on spillover risk; banks continue emergency borrowing
Nikolay Pandev
"Looking ahead, the longer that financial conditions remain tight, the greater the risk that stresses spread beyond the banking sector, unleashing greater financial and economic damage than we anticipated," Moody's wrote in its latest global credit conditions report.
"Our baseline expectation is that [financial regulators and other policymakers] will broadly succeed in doing so... but calibrating policy remains challenging, which raises the risks that policy missteps, limitations or unintended consequences could result in a further deterioration of the credit environment."
On Thursday, Treasury Secretary Janet Yellen said regulators were prepared to take additional actions to ensure Americans' deposits are safe, after ruling out coverage of all uninsured deposits at U.S. banks.
Meanwhile, emergency borrowing under the Fed's two backstop facilities (Discount Window Lending + Bank Term Funding Program) reached another whopping $163.9B this week, similar to the $164.8B recorded last week. The figures signify the extent of the current crisis and its containment measures, with weekly borrowing under the discount window typically under $10B.