We inject liquidity into the banks, create bad banks where we put aside toxic assets and the ECB puts all the meat on the grill to make the risk premium of the countries of the periphery of Europe lower more significantly, but in Europe we remain the all unable to ensure that banks do not stop reducing credit to the private sector.
The evolution of credits to the private sector
In the graph that we attached you have the evolution of the M3 (orange line) and the evolution of credits to the private sector (blue-green line). How can you observe from the year 2012 a strange phenomenon occurs. M3 is growing vigorously, while loans to the private sector are increasingly negative.
We have entered 2014 and everything seems to remain the same. In 2013, European banks have reduced the size of their balances by 20%. In January the contraction of credit to the private sector (Companies + Households) in the Eurozone was 2.3% , in February 2.2%.
The situation is not the same in all countries
Of course, the situation is not the same in all countries. In Spain , credit to companies fell 10.7% in January and 9.7% in February (some optimist will see this evolution as a change in trend).
In Ireland , country of which the EU is proud of the supposed good results of the rescue, in February the credit fell 6.5% (the biggest contraction since October 2011).
The cost of financing companies remains completely uneven
And while the risk premiums of sovereign bonds are contracted, the cost of financing companies remains completely uneven in the Eurozone. In Finland a company is financed at 2% in Greece or Cyprus will not find a cheaper loan of 6%.
And in the meantime, the M3 aggregate (a way of measuring money in the system) does not stop increasing. So we only have to ask ourselves And where is the money?