The FT Money Supply blog reports that there has been little demand for USD funding from Eurozone banks. On the other hand, Spanish banks are making much use of ECB funding.

This seems further confirmation that recent troubles in the banking system are confined those Eurozone banks that likely have the highest exposure to the debts of dodgy governments — like Spain’s. With the ECB effectively becoming universal counterparty in interbank lending to such banks, the immediate crisis should continue to moderate and asset prices should rally further.