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BIS: Bank Credit at Zero Growth Everywhere But Asia

June 30, 2016 (EIRNS)—A Bank for International Settlements quarterly report issued today, shows that banks have ceased issuing new credit to business everywhere in the world except Asia, feeding the deflationary collapse underway throughout the trans-Atlantic countries and Japan.

"Bank credit" (loans plus bond purchases) to non-financial companies is contracting (as of the end of 2015) in the United States, the euro area, Latin America, "emerging [Eastern] Europe," and worldwide, according to the BIS report and its charts. As to "credit to banks"—that is, interbank lending — it is rapidly shrinking in all of those regions, as well as worldwide.

The exception, shown in the BIS charts, is "emerging Asia," where bank credit—dominated by China’s national "policy banks," is still growing at approximately 5% annually.

The report is the BIS Quarterly Review for June 2016. Its other much-watched information concerns the global nominal value of derivatives contracts. This, according to BIS, has declined dramatically since its last peak in 2013, and over-the-counter derivatives volume has fallen to "only" $500 trillion, 30% less than three years earlier. This does cohere with the shrinkage of bank credit economic activity. The exception to this, as already mentioned, is Asia, and particularly China, which is not a banking system much given to derivatives exposure.

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