As an illustration of this, the cost for banks to borrow euros from each other has risen sharply since significant concerns re-emerged about Greece in May this year. Graph 2 shows that the cost of European banks borrowing from each other in the short-term unsecured market has risen to its highest level in the post-Lehman period, reflecting heightened counterparty concerns.
The burden of regulatory compliance can be particularly daunting for small banks. And competition, from large banks and credit unions as well as other nonbank financial service providers, is always a concern. My colleagues on the Federal Reserve Board and I are committed to making sure that we understand the challenges faced by community banks.