LONDON -- Tensions in Europe's short-term lending markets are on the rise again, repeating a pattern that central bankers had hoped to end by pumping in hundreds of billions of dollars in recent months.
The pressure partly reflects an end-of-quarter effect, as banks hoard cash to make sure their finances look healthy when they report second-quarter results.
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But it also demonstrates that fears of further write-downs and possible failures aren't going away.
The write-downs will eat further into the capital cushions banks maintain against future losses, at a time when raising new capital is becoming tough. Since the financial crisis began last summer, banks globally have raised about $300 billion in an attempt to offset nearly $400 billion in write-downs.
"The problem is that as quickly as capital is being raised, it has been lost," Citigroup Inc. banking analyst Simon Samuels wrote in a recent report.
