NEW YORK (CNNMoney) -- As the European debt crisis heated up, managers of American money market funds started pulling money out of European banks, with the French banks feeling the biggest impact.
By the end of August, 10 of the top U.S. money market funds by dollars had reduced their exposure to European banks by 8% from July.
Between the end of May and the end of August, European banks lost 27% of their dollars from mutual funds, according to data compiled by Fitch Ratings.
"The drops we've seen in June, July and August will probably continue into September," said Alex Roever, head of short-term fixed income at JPMorgan Chase. "It would take some sort of broader political solution in Europe to stabilize the banks before you would see money market money move back into the European banks."
French banks have taken the biggest hit. Money market dollars allocated to French banks between July 30 and August 30 dropped 19%, and 34% between the end of May and end of August.
As U.S. money market funds have shifted out of European banks, many of those European institutions have struggled to maintain their U.S. dollar holdings.
Last week, the Federal Reserve and four other central banks, including the European Central Bank, promised to coordinate efforts to bolster European banks' access to dollars.
Money markets fund day to day borrowings of banks and are a large source of short-term credit for most banks.
U.S. money market funds actually bumped up their exposure to German banks by 8% between July and August, but the total amount invested is still down 36% since the end of May.
With this exodus, the 10 largest prime money market accounts in the United States still have 42.1% of their holdings or roughly $285 billion moving through European banks, according to Fitch. It's the lowest level since Fitch began tracking money market flows in July 2006.
Money market accounts continued to move funds around the world with funding to Japanese banks spiking 33% in July. Money market managers also moved funds into Canadian, Australian and Nordic banks in July, according to Fitch's data.
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