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Finally, interbank exposure data could shed light on which institutions are too systemic to liquidate swiftly.
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The model incorporates multiple sources of systemic risk, including size of financial institutions, direct exposure from interbank lendings, and asset fire sales.
The central bank also responded to signs of stress in interbank markets when institutions, wary of each other's exposure to troubled government paper, became reluctant to lend to each other.
The E.C.B. also responded to signs of stress in interbank markets as institutions, wary of each other's exposure to troubled government paper, became reluctant to lend to each other.
European investors remained pessimistic that interbank lending would remain stagnant for some time and continued to worry about exposure of local insurers and banks to assets held by the troubled firms.
But concerns about banks' exposure to such risky debt have led to strain in the European interbank markets.
A more classical example of an exposure arising from a dark supply chain is the recent SWIFT exploit, which emanated from the dated interbank transfer system.
No interbank lending available.
London Interbank Offered Rate 54.
Interbank rates, though they have eased, are still high: not knowing which institutions might be on the hook for subprime losses and spooked by their own exposures, banks remain wary of lending to one another.
Interbank lending is the photosynthesis of finance.
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