MILAN, July 7 (Reuters) – Italy’s liabilities towards other euro zone central banks hit a new all-time high in June, as the country’s lenders rushed to borrow from the European Central Bank under extraordinary measures deployed to fight the impact of the COVID-19 pandemic.

Italy’s so-called Target 2 debt rose to 536.72 billion euros ($605.10 billion) last month, from 517.35 billion euros in May, Bank of Italy data showed.

ECB’s funding to Italian banks increased to 345.23 billion euros last month from 290.96 billion euros in May after lenders in the country borrowed longer-term funds which the ECB offered at negative rates.

A country’s Target 2 position is monitored as a sign of financial stress and imbalances within the euro zone. Target 2 debt could rise, for example, due to capital outflows. It also reflects increased reliance of domestic banks on EBC’s funding.

The Bank of Italy started publishing its Target 2 debt position in September 1997. ($1 = 0.8870 euros) (Reporting by Sara Rossi, editing by Valentina Za)