In its quarterly survey of 158 big banks, the European Central Bank (ECB) highlighted that “firms’ demand for credit dropped to lowest since the survey started in 2003.”
Additional takeaways
Net 14% of Eurozone banks tightened credit standards in 2Q23 vs 27% in 1Q23.
Banks expect more moderate net tightening on loans to firms in 3Q23; unchanged on home loans.
Cumulated net tightening since beginning of 2022 has been substantial.
Eurozone banks tightened terms and conditions further in 2Q23.
Firms’ demand for credit dropped to lowest since survey started in 2003.
Banks expect much smaller decline in credit demand from firms in 3Q.
Banks’ access to funding, especially retail, deteriorated in 2Q.
Market reaction
At the time of writing, EUR/USD is trading flat on the day at 1.1062, having extended its retreat from intraday highs of 1.1083.
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