This paper explores the importance of collateralized bank-funding strategies for the design of monetary policy measures during crisis. It first distinguishes between market-based and bank-based crisis measures to then focus on the collateral management strategies of European banks, in the context of an increasing reliance on secured market funding, to discuss a crucial policy challenge in monetary unions with integrated funding markets: banks‟ access to market funding depends on existing portfolios of marketable collateral, in Eurozone mainly composed of sovereign bonds. The constraints on the central bank‟s ability to stabilize markets for collateral may worsen „coordinated risks‟ between counterparty (bank) and collateral (sovereign bond), further deteriorating both bank and sovereign funding conditions, particularly under a limited degree of internationalization of collateral portfolios. Since bank-based crisis policies (LTROs) cannot offer effective solutions for preserving the role of sovereign bonds as marketable collateral, the dilemma of how to stabilize funding conditions for European banks within the existing institutional architecture remains unresolved and may eventually lead to the disintegration of the European project.