FRANKFURT May 28 Lending to households and
firms in the euro zone declined further in April and money
supply growth slowed markedly despite the European Central
Bank's ultra-loose monetary policy stance.
The ECB has cut interest rates close to zero, pumped extra
liquidity into the banking system and widened the pool of assets
it accepts in return for funding, but the measures have so far
not managed to unclog lending to the real economy.
The central bank is now putting the bloc's top banks through
a thorough review of their balance sheets to weed out soured
loans, update collateral valuations and adjust capital so that
they can lend more freely in future.
However, loans to the private sector fell by 1.8 percent in
April from the same month a year earlier, ECB data released on
Wednesday showed, after a contraction of 2.2 percent in March.
Euro zone M3 money supply - a more general measure of cash
in the economy - grew at an annual pace of 0.8 percent, slowing
down from a downwardly revised 1.0 percent in March.
(Reporting by Eva Taylor and Paul Carrel)