Euro Supremo Sounds the Alarm
Mr Trichet said the bank was disturbed by signs of an fully-fledged credit crunch as banks shut off lending to healthy borrowers. Credit has contracted in absolute terms for the first time in recent weeks.
"There are indications that falling credit flows reflect tight financing conditions associated with a phenomenon of deleveraging. If such behaviour became widespread across the banking system, it would undermine the raison d'etre of the system as a whole" he said.
Labels: Euro collapse