Senior analysts and traders warned of impending bank failures as a summit intended to solve the European crisis failed to deliver a solution that eased concerns over bank funding.
The European Central Bank admitted it had held meetings about providing emergency funding to the region's struggling banks, however City figures said a "collateral crunch" was looming.
CreditSights' weekly funding report said the ECB had effectively become the central clearer for the region's banks as lenders are increasingly distrustful about funding one another.
Bank deposits with the ECB now stand at their highest level since June 2010 at €905bn (£772bn) as lenders withdraw deposits held with their peers and put them into the central bank. At the same time, banks in major eurozone countries such as France and Italy have become increasingly reliant on central bank funding. This follows the trend seen in smaller countries like Ireland where lenders have effectively becomes taxpayer-funded "zombie" banks.
Alastair Ryan, a banks analyst at UBS, said there would be "no Lehman moment" – or single catastrophic event – for the European banking sytem, but added that without a full backstop of bank liabilities by governments the system would "struggle to finance itself in the next year in a durable way".
"The system at the moment hasn't got funding of a duration that allows it to function, so it's failing," he said.
Others think the eurozone banks are heading for a catastrophe and the worry is growing that a major bank could collapse within weeks.
2. BBC News - The top US military commander, Gen Martin Dempsey, says he is concerned about "the potential for civil unrest" as Europe's financial crisis unfolds.
Gen Dempsey said it was unclear the latest steps taken by EU leaders would be enough to hold the eurozone together, adding that a break-up could have consequences for the Pentagon.
Gen Dempsey, who is chairman of the Joint Chiefs of Staff, told an event hosted by the Atlantic Council, a Washington think-tank: "The eurozone is at great risk."
3. Forbes Don Martin - American investors need to be aware that problems in the Eurozone will lead to global financial contagion,a worldwide recession and a possible repeat of a crisis like the one that followed the 2008 Lehman bankruptcy.
All that would inevitable do some serious damage to U.S. stocks.
Donald Martin, CFP founded Mayflower Capital in 1993 for the purpose of providing personal financial services. The company is a fee-only financial planning and investment advisory firm.
Instead of ending on a downer
Some inspiring words from the Pokemon Movie via Herman Cain
Life can be a challenge
Life can seem impossible
It's never easy
When so much
Is on the line
But you can make a difference
You can set things right
A gift to dream
And make dreams real
Is yours and mine
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