Euribor bank-to-bank lending rates rose on Friday as financial markets waited to see if Cyprus could clinch a bailout deal by a Monday deadline set by the European Central Bank. The ECB said it could only approve emergency funding for Cypriot banks beyond Monday if an EU/IMF programme is in place to ensure their solvency and for that Cyprus needs to come up with a plan to raise 5.8 billion euros.
The parliament will meet on Friday to debate a raft of government crisis measures, including the creation of a "Solidarity Fund" of state assets, the imposition of capital controls and measures to address the island's stricken banks. The three-month Euribor rate, traditionally the main gauge of unsecured bank-to-bank lending, edged up to 0.215 percent from 0.211 percent. The six-month rate rose to 0.339 percent from 0.334 percent, while the one-week rate increased to 0.088 percent from 0.085 percent. The overnight Eonia rate fell to 0.062 percent from 0.065 percent.
Dollar-priced bank-to-bank Euribor lending rates were higher, with three-month rates rising to 0.51300 percent from 0.51200 percent and one-week rates up to 0.33100 percent from 0.32700 percent. Excess liquidity in the euro zone banking system is at around 370 billion euros, still high enough to keep market rates below the ECB's refinancing rate.
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