A deposit war to trump the euro battle

Banks around the world are preparing for what they see as the likely split of the euro, but here in Australia it's the ongoing war for deposits that will play a more critical long-term role.

While German Chancellor Angela Merkel is optimistic that German aid to the Spanish banks will gain approval, around the world banks are now starting to prepare for the real possibility of a euro split in the next 12 to 18 months, which is adding to funding pressures and intensifying the European credit squeeze. People no longer trust many European banks which is why bond yields in countries like Germany are so low.

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