Eurozone M3 Money Supply Falls, Bank Lending Remains Weak

Eurozone money supply continued to fall and bank lending remained weak in October amid tight monetary policy, data published by the European Central Bank showed Tuesday.

The monetary aggregate M3 declined 1.0 percent on a yearly basis in October after a 1.2 percent fall in September. This was the fourth consecutive fall.

In three months to October, the annual growth rate of M3 averaged -1.2 percent.

The narrow measure M1 posted an annual decline of 10.0 percent, slightly faster than the 9.9 percent decrease in the previous month.

Further, data showed that credit to residents dropped 0.5 percent and that to general government was down 2.6 percent.

By contrast, the annual growth rate of credit to the private sector doubled to 0.4 percent from 0.2 percent a month ago.

Likewise, adjusted loans to the private sector registered an annual growth of 0.4 percent, following a 0.2 percent rise in September.

Among the borrowing sectors, the annual growth rate of adjusted loans to households eased to 0.6 percent from 0.8 percent a month ago.

At the same time, adjusted loans to non-financial corporations fell 0.3 percent in October, in contrast to the 0.2 percent rise in September. This was the first decline since July 2015.

The October bank lending data did not show anything particularly spectacular, this was just a continuation of the recent trend, ING economist Bert Colijn said.

That trend shows a clear cooling of borrowing from both corporates and households, largely due to higher interest rates, he noted.

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