Banks gave 6.9 percent more loans to companies
Lending to companies has gained some momentum in the euro area amid the second wave of pandemics. In November, banks in the currency area granted 6.9 percent more loans to companies than a year earlier, as the European Central Bank (ECB) announced on Tuesday. In October the increase was 6.8 percent.
In the face of the virus crisis, many companies are securing loans in order to have sufficient funds and avoid payment difficulties. However, experts assume that the risk of failure will increase the longer the pandemic lasts. In November, the institutes extended 3.1 percent more loans to private households than a year earlier.
The ECB is supporting the economy with large-scale aid programs to keep financing conditions favorable and to ensure that the flow of credit to the economy does not slow down during the crisis. Among other things, at the interest rate meeting in December, it had increased its PEPP pandemic emergency program by 500 billion euros to a volume of now 1.85 trillion euros. This was the second addition. The purchases have also been extended to at least the end of March 2022.
The money supply M3 increased by 11.0 percent in November. Economists had only expected an increase of 10.6 percent. M3 includes, among other things, cash, deposits in current accounts as well as money market papers and bonds. If the ratio increases sharply, this can indicate higher inflation in the medium term.
