Rather, a more significant impact could be felt indirectly through a slowdown in trade and foreign direct investment activities in emerging countries, such as China, where the euro area represents one of the largest trade partners (Charts 19, 20). With regard to finance, the US dollar funding market and money markets remain calm.
The US dollar funding cost remains low for Japanese banks since their exposure to the euro area has been limited and their balance sheets have been relatively sound. It is true, though, that Japanese banks faced a moderate increase in US dollar funding costs in the middle of the deepening European sovereign debt crisis from the middle of 2011.