Thank you for that informative essay on a situation I had no idea existed. I have an M.A. in economics, but financial markets are not my area, so I would appreciate any corrections that might be offered.

It seems to me that this sudden spike in the price of cash among banks for cash must have one of three causes: a drop in supply coming into the market, an increase in demand in the market, or some of both. Common sense suggests it is most likely the last alternative.

What could cause a shortage of supply? One could be hoarding of cash, those who have simply not wanting to part with it. Another possibility could be that cash is flowing out of the country, for investing or speculation.

“Speculation” suggests that there could be a spike in the need for cash to cover bets that have gone bad. That is where I would place my bet as to the cause of the problem. That it is such a mystery suggests those failing positions are located in the deep, dark labyrinth that is the derivatives market.