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Bank lending in the euro area weakened in February 2018


In February 2018, bank lending to companies in the euro area weakened, while its level remains close to the multi-year high, according to the European Central Bank (ECB). Lending to non-financial corporations increased 3.1% year-on-year after growth of 3.4% in January, when lending grew at the strongest pace since May 2009.
 
Bank lending in the euro area weakened in February 2018
 
The main indicator of the ECB of money supply, M3, for the 12 months to February increased by 4.2%, this indicator also slowed slightly after rising by 4.5% in January. Economists surveyed by The Wall Street Journal forecast an increase of 4.6%.

The surprisingly soft monetary and credit data follows earlier evidence that the eurozone economy is starting to cool down after a strong 2017. Business confidence in the region weakened against the backdrop of the beginning of trade wars in the world.

The economy of the euro area largely depends on the availability of financing, and economists closely follow the data on lending as an indicator of the state of the economy.

At the same time, household lending remained stable in February. According to the ECB, the indicator increased by 2.9% compared to the previous month.

It is worth noting that the European Central Bank (ECB) warned auditors that lenders may try to take advantage of the transition to new accounting standards in order to spread credit losses for several years and not reflect them in the financial results for 2017, three people said, familiar with this issue, reports Bloomberg.

The single supervisory mechanism (SSM) of the ECB, which controls the largest banks in the region, noted the risk earlier this year as part of its regular dialogue with accountants who check the balance sheets of creditors, sources said.

A change in the new accounting rules could lead to banks classifying "bad" loans in such a way as to spread losses from them for a five-year past period instead of being immediately reflected in the reports.

One source said that the SSM warned banks not to cover losses, completing their financial statements for 2017. At the same time, the source did not say whether the SSM was satisfied with how the banks disclosed their data for 2017.

The SSM also informed the European Banking Authority, which controls the EU banking rules, of its concerns. During the discussion of this issue, the SSM Council agreed that the supervisor could introduce additional capital charges if violations were found.

The new standard of accounting IFRS 9, which comes into effect this year, requires creditors to reserve against expected losses on loans. EU legislators have previously allowed the introduction of a five-year period during which the effect of increasing reserves will gradually appear.

European lenders are preparing for the stress tests of their balance sheets in Europe at the end of this year, when the impact of the new rules for accounting for bad loans will also be tested.

While increased economic growth on the continent contributed to increased profits, the need to provide a long-term loan portfolio affected the balance sheets of lenders, especially in Italy, Greece and Cyprus.

 
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    GDP of the world's countries 2017
    List of the IMF in trillion. $.

      1 USA - 19,284
      2 China - 12,263
      3 Japan - 4,513
      4 Germany - 3,591
      5 Great Britain - 2,885
      6 France - 2,537
      7 India - 2,487
      8 Italy - 1,901
      9 Brazil - 1,556
      10 Canada - 1,530
    GDP per capita world countries 2017 (table)

    List of the IMF in $

      1 Luxembourg - 108004.9
      2 Switzerland - 79347.76
      3 Norway - 72046.29
      4 Qatar - 67269.64
      5 Macao - 61365.29
    The state debt of the countries of the world 2017

    Public debt of 2017 countries as a percentage of GDP

      1 Japan - 250,91
      2 Lebanon - 147,62
      3 Italy - 131,71
      4 Eritrea - 127,5
      5 Portugal - 127,33
      6 Cape Verde- 122,25
      7 Bhutan - 122,12
      8 Jamaica - 116,07
      9 USA - 107,48
      10 Barbados - 106,58
    Gold and currency reserves of the countries of the world 2017

    International reserves, billion USD

      1 China - 3080,7
      2 Japan - 1260,0
      3 Switzerland - 773,1
      4 European Union - 745,9
      5 Saudi Arabia - 492,9
      6 Taiwan - 444,4
      7 Russia - 419,9
      8 Hong Kong - 413,3
      9 India - 393,6
      10 Republic of Korea - 383,8

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