The 10 biggest prime U.S. money market funds cut their holdings of debt issued by euro-area banks by $8.3 billion in May as concerns mounted that the 17-country currency union could break up.
The funds reduced holdings of Dutch banks by $3.3 billion last month, while those in German banks declined by $2.9 billion and in French banks by $2 billion, according to data compiled by Bloomberg. Funds increased holdings issued by Japanese, U.S. and U.K. banks by a combined $11.2 billion.
In addition to selling commercial paper, certificates of deposit and repurchase agreements to money funds, banks can obtain short-term funding from central banks, inter-bank repurchase agreements or increase deposit rates to attract more money from individual customers. Banks can also hold cash-like instruments in a liquidity pool to meet redemptions.