The uncertainty about financial institutions’ potential exposure to US sub-prime-related losses and to the valuation techniques of complicated structured credit products, however, does appear to have led to a lack of confidence among banks and thus tensions in the interbank money market. The ECB immediately reacted to the market tensions and continues to contribute to the smooth operation of money markets.
Turning to global demand factors, global economic activity remains resilient so far despite the turmoil. The impact of the US economic slowdown on world demand (and euro area foreign demand) has been largely offset by robust economic growth in emerging economies.