Where's my money?

Lending Growth Slows in Euro Zone
at New York Times, by Jack Ewing, March 28, 2012

FRANKFURT — Bank lending to consumers and businesses continued to grow very slowly in the euro zone in February, according to figures issued Wednesday, a sign that the “wall of money” unleashed by the European Central Bank in recent months has not yet reached borrowers.
Growth of loans to the private sector slowed to an annual rate of 1.1 percent from 1.5 percent in January, the E.C.B. said in its monthly report on the euro zone money supply. The report, normally a fairly routine event, was closely watched for what it said about the impact of €1 trillion, or $1.3 trillion, in low-interest, three-year loans that the E.C.B. has disbursed to banks since December.
Most economists agree that the three-year loans have taken pressure off banks and averted a serious credit shortage that would have been toxic for the euro zone economy. At the end of last year, for the first time in the history of the euro, the overall supply of money as measured by the E.C.B. declined for three months in a row.
The E.C.B. loans seem to have reversed that alarming trend.
But the data released Wednesday showed that the E.C.B. program had not yet translated into a big increase in lending or borrowing.
“The risk of a credit crunch in parts of the region has not fully disappeared,” Martin van Vliet, an economist at ING Bank, said in a note to clients Wednesday.
Top officials of the E.C.B. have said they did not expect the lending to reach borrowers immediately. In fact, compared with January, lending to the private sector fell by €8 billion in February, though the level was still higher than a year earlier.
“The E.C.B. may be not too disappointed about the monetary data published today, as it probably expected the sluggish loan momentum to continue for some time,” Michael Schubert, an economist at Commerzbank, said in a note to clients.
The second round of E.C.B. three-year loans was not issued to banks until March 1 and would not have had any impact on the data released Wednesday.
Tepid lending growth may also reflect reluctance by companies and people to borrow, rather than a lack of banks willing to lend, Mr. Schubert pointed out.
The E.C.B. reported sharp declines in lending in Spain, Portugal, Ireland and other countries struggling to contain government spending. But growth in lending was also slow in Germany, which has avoided much of the pain of the European sovereign debt crisis. Mario Draghi, the president of the E.C.B., expressed optimism this week that the money would soon reach small businesses.
Hundreds of smaller German community banks, the traditional source of credit for smaller companies, were among those taking advantage of the second round of E.C.B. loans, he said. “We cannot say that this money will necessarily go to these smaller enterprises,” Mr. Draghi said in Berlin on Monday, “but it is certainly very close to them.”