Away from the headlines about The Panama Papers, global financial markets turmoiled quietly this week with a surge in equity and FX volatility and banks suffering more death blows. However, something happened in Saudi Arabia's banking system that was largely uncovered by anyone in the mainstream... overnight deposit rates exploded to their highest since the financial crisis in 2009...
It is clear that that the stress in Saudi markets has spread from the forward derivatives markets to actual funding problems.
This suggests one of the two main things: either Saudi banks are desperatly short of liquidity or Saudi banks do not trust one another and are charging considerably more to account for the suspected credit risk.
Either way, not good. So what is going on behind the scenes in Saudi Arabia?