IMF: Banks May Spread Greek Contagion

Reuters

The economic crisis in Greece could reach the United States through money market funds, especially if the contagion spreads to European banks, officials from the International Monetary Fund said Wednesday.

``Money market mutual funds are exposed here and the United States is in a relatively stronger position than Europe,'' said fund's No. 2 official, John Lipsky, at a news conference.

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Some financial intermediaries depend on money markets for funding in the United States, but the Federal Reserve provides a ``readily available'' alternative source of financing, Lipsky added. The bigger risk of Greek contagion comes from European banks, said Gian Maria Milesi-Ferretti, an IMF economist.

``The channel of transmission through money market mutual funds would be operative, more dangerous in case the difficulties ... spill over to banks in core Europe because core European banks have significant dollar activity,'' he said.

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