Lending in Europe still slow-growing, despite stimulus

$1.3 trillion in loans to banks yet to be felt

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Mario Draghi, president of the European Central Bank, is optimistic loan money will soon reach small businesses.

FRANKFURT - Bank lending to consumers and businesses continued to grow very slowly in the eurozone in February, according to figures issued Wednesday, a sign that the so-called wall of money unleashed by the European Central Bank in recent months has not yet reached borrowers.

The growth of loans to the private sector slowed to an annual rate of 1.1 percent, from 1.5 percent in January, the bank said in its monthly report on the eurozone money supply.

The report, normally fairly routine, was closely watched for what it said about the impact of $1.3 trillion in low-interest three-year loans that the central bank has disbursed to banks since December.


Most economists agree the three-year loans have taken pressure off banks and helped avert a serious credit shortage that would have disrupted the eurozone’s economy.

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At the end of last year, for the first time in the history of the euro currency, the overall supply of money as measured by the central bank declined for three consecutive months.

The loans seem to have reversed that trend.

But the data released Wednesday showed that the central bank’s program had not yet translated into a big increase in lending or borrowing.

Top officials of the central bank have said they did not expect the lending to reach borrowers immediately. Compared with January, lending to the private sector fell by nearly $10.7 billion in February, although the level was still higher than it was a year earlier.


“The ECB 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 the central bank’s three-year loans was not issued to banks until March 1 and would not have had any impact on the data released Wednesday.

Mario Draghi, president of the European Central Bank, expressed optimism this week that the loan 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 loans, he said.

“We cannot say that this money will necessarily go to these smaller enterprises,’’ Draghi said in Berlin on Monday, “but it is certainly very close to them.’’