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Eurozone loans to private sector increase slightly: ECB

The European Central Bank is still accepting asset-backed securities issued by Volkswagen's leasing arms as collateral, data published on the ECB's website showed on Monday.

[FRANKFURT] Growth of loans to the private sector in the euro area, a gauge of economic health, is picking up speed, albeit very slowly, European Central Bank data showed on Friday.

After long months of contraction, the volume of loans to private businesses and households increased by 1.0 per cent in August compared with the same month in 2014, the ECB said in a statement.

That is only incrementally faster than the previous month when private sector loans had increased by 0.9 per cent.

The long and deep financial crisis in the 19 countries that share the euro has squeezed lending, thus dampening economic activity. But the ECB has launched a raft of different policy measures to get credit flowing again, most significantly a massive programme to buy more than one trillion euros (US$1.1 trillion) worth of public sector bonds to pump liquidity into the system.

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And those measures are now beginning to make themselves felt, the ECB data showed.

Nevertheless, the overall eurozone money supply grew 4.8 per cent in August from a year earlier, slower than the 5.3 per cent recorded in July.

The ECB regards M3 money supply as a barometer for future inflation.