Connect to share and comment

Eurozone crisis drying up credit to households: ECB

PlacardEnlarge
(Globalpost/GlobalPost)

Bank lending to private households in the euro area contracted again in February as the region's long-running debt crisis continues to choke demand for credit, data showed on Thursday.

Eurozone bank loans to the private sector declined by 0.9 percent in February compared with the same month in 2012 after already shrinking by the same rate the previous month, the European Central Bank said in a statement.

The ECB has long argued that falling loans to the private sector reflects weak demand for credit rather than tight lending conditions, given the pessimistic view of eurozone growth prospects and heightened risk aversion during the crisis.

The ECB also published eurozone money supply data, which suggest that growth in the money supply -- a key guide to future inflation -- slowed last month.

Growth in the M3 indicator, which measures the amount of money in circulation, grew by 3.1 percent in February, compared with 3.5 percent in January.

The ECB regards the M3 figure as a key guide to inflation pressures and uses it to set interest rates accordingly.

spm/dlc/wai

http://www.globalpost.com/dispatch/news/afp/130328/eurozone-crisis-drying-credit-households-ecb