Tom Keighley

Cross-border bank lending plummets

Cross-border bank lending fell by $472bn in the fourth quarter of 2012, research from the Bank for International Settlements (BIS) shows.

Lending had increased slightly by 0.4% in the previous quarter, and Europe and the US were hit significantly by the retreat in international bank activity.

In the Eurozone area, claims on banks fell $284bn, caused by reduced lending volumes by banks in Germany, Finland, France and Luxembourg.

In contrast, cross-border lending to emerging markets was up by $43bn, fuelled by increased activity in the Asia-Pacific region.

There was also some increased in lending to emerging economies in Europe, such as Poland and the Czech Republic.

In a speech last month, BIS managing director, Jaime Caruana, suggested that “accommodative” monetary policy might not be the answer to restoring growth.

Speaking in London at the Official Monetary and Financial Institutions Forum he said central banks must “think outside the box.”

Mr Caruana said: “If a medicine does not work as expected, it’s not necessarily because the dosage was too low. Maybe instead the overall treatment, and the role of the medicine within it, should be reconsidered. Most likely something else is needed.”

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