Over the past few months, developments in several financial markets give rise to some optimism. Although market liquidity in the euro area is still tight, it has improved appreciably, especially in the interbank money market. Since mid-February, conditions in the euro money markets improved. This is reflected in the lower utilisation of the ECB deposit facility and in higher overnight unsecured interbank transaction volumes.
More importantly, money market rates have declined substantially and the spreads between Euribor rates and EONIA swap rates have continued to narrow, as shown in Chart 7. In late May 2009, the spread between the 3-month Euribor and the EONIA swap rate had fallen below 50 basis points for the first time since the collapse of Lehman Brothers in September 2008.