"Despite the positive signals from the Bank Lending Survey, lending in the Euro area is still picking up only slowly. On the other hand, the banks' government bond portfolios are growing. The ECB's ability to rapidly ramp up investment in the economy by way of lending remains limited".
-DZ Bank
The Euro zone money supply and credit to the private sector grew at a faster pace in June than the month before, according to official data released by the European Central Bank (ECB) on Wednesday. The ECB reported that its broad indicator of money supply M3 advanced 5.0% on an annual basis in June. That was in line with analysts' expectations following the previous month's reading of 4.9%. The central bank regards M3 money supply as a barometer for future inflation. The data also revealed that the narrower monetary aggregate M1 grew 8.6% year-over-year in the sixth month of the year, down from the 9.1% growth pace seen in May. Furthermore, the annual growth rate of loans to the private sector climbed 1.5% in June, compared to last month's pace of 1.3%. Loans to households in the Euro zone went up by 1.7% year-over-year, or 0.1% up month-over-month in June, matching analysts' estimates. In the meantime, loans to non-financial corporations in the 19-nation currency bloc increased 1.7% in the reported month, after rising 1.6% in the preceding month. The following data release added evidence that the European Central Bank's credit easing policy, which was launched two years ago, is working. Moreover, the data confirmed the view of a continued improvement in credit conditions, stated in the latest ECB quarterly bank lending survey.
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