Surviving the liquidity squeeze

The week leading up to the expiry of the European Central Bank’s (ECB) one-year long-term refinancing operation (LTRO) on July 1 was watched with interest by the media and traders alike. Hot on the heels of the sovereign debt crisis, many pundits assumed a large number of eurozone banks would rely heavily on ECB funding, and expected a substantial drawdown on the ECB’s three-month LTRO on June 30 to compensate for the one-year operation’s expiry.

For these onlookers, the events leading up to Ju