The ventricular system of premature infants contains a germinal matrix which lies within the caudothalamic groove (space between caudate head and thalamus). The germinal matrix is highly vascular and serves as a stem source for neuroblasts in-utero. It typically involutes by term. 

Hemorrhage into the germinal matrix commonly occurs in premature infants during first 3 days of life. Complications include destruction of precursor cells within germinal matrix, hydrocephalus and hemorrhagic infarction of periventricular tissues.