Sound bites: weak Eurozone money supply data is a clarion call for ECB to ease again

The weak Eurozone money supply data is a clarion call for ECB to ease monetary policy again. Eurozone money supply growth has been in negative growth territory for far too long and the ECB would be very unwise to ignore it any longer. March’s 2.2% annual contraction in lending to the private sector is a savage indictment that the ECB’s policies are not working. The Eurozone is just emerging from recession and needs as much stimulus as it can muster to foster faster growth. With the banks withholding much needed credit from the private sector, the recession will founder again before too long. The ECB can overcome this by dipping the official deposit rate into negative territory to force the banks to lend rather than hoarding it at the central bank. It is absolutely pointless for the ECB to add more liquidity into the money markets without sanctioning the banks to lend at the same time. Right now the Eurozone has a near zombie-like banking system that is inhibiting fuller recovery. The ECB must adopt a much more pro-active strategy to encourage the banks to lend and embrace quantitative easing at the same time to guarantee that the Eurozone returns to faster growth and fuller employment over the future.