Lending to euro zone households and companies has contracted for the 28th month in a row in August. As David Pollard reports, it puts a spotlight on the ECB's efforts to get credit flowing again.
Happy Europeans share their joy in a TV ad for this week's launch of a new ten euro note. The problem is, not much money is getting through to them. Lending in the euro zone shrunk for the 28th month in August - that's sharpening the pressure on the ECB to get credit flowing. Nomura's senior analyst Alastair Newton says it may be a tall order. SOUNDBITE (English) ALASTAIR NEWTON, NOMURA: ''The problem is this, off course. Markets are hanging a lot of hope on QE. If the ECB goes into QE, I think you are going to see various German academics rushing off to the German Constitutional Court .... It may well come down against QE as being a legitimate means for the ECB to try to bolster the euro zone economy.'' A German 'no' to QE may come even sooner than that. Finance Minister Wolfgang Schaeuble has told parliament he's ''not particularly happy'' even with the current ECB programme to buy assets. But as for the man whose signature adorns each crisp new note: he's said twice this week alone the ECB stands ready to use ''unconventional instruments''. Amid sagging inflation, Mario Draghi has seen a poor take-up of the ECB's existing programme of targetted loans to banks. SOUNDBITE (English) ECB PRESIDENT, MARIO DRAGHI: ''Given our projections, now our monetary policy will stay loose and, as we say, very accommodative for a long period of time.'' In fact, Draghi's best friends at the moment are the strong US dollar - and forex traders. Together, they're driving the euro down to its lowest level in nearly two years. Simon Smith is with FXPro. SOUNDBITE (English) SIMON SMITH, FXPRO: ''The euro has been one of the weaker performances in the last sort of four to five weeks as Draghi has looked to push more easing measures. But they've been met with limited success, and my fear is that we're likely to get more talk about the euro and Draghi maybe in subtle ways trying to talk it down, because at the moment expanding their balance sheets, putting in more stimulus measures, is not proving that easy.'' A lower euro should raise import prices and hence inflation - whilst boosting demand for euro zone goods. The ECB has denied talking it down. But it's certainly got no reason to talk it up.