Global lending remained weak in 2016's first quarter, with dollar-denominated bank loans to non-US borrowers worldwide falling for the first time since the 2007-09 financial crisis, the Bank for International Settlements said on Sunday.
Dollar loans to emerging markets and lending in euros to borrowers outside the eurozone also fell, signs that the stronger dollar, emerging market weakness and financial market uncertainty took a toll on the demand for credit, Reuters reported. The stock of dollar loans to non-US borrowers around the world fell 0.7% from the same period a year ago, although a 4% increase in credit via bond markets lifted overall dollar-based credit to $7.9 trillion at the end of March.
The stock of dollar-denominated credit to emerging markets—a key measure of global liquidity conditions—fell to $3.2 trillion at the end of March, down $137 billion from a year earlier, the BIS said. That may have reversed in recent months, however, thanks to the increase in emerging market bond issuance and rebound in capital inflows during the three months to June, the BIS said.
Euro loans to non-eurozone borrowers fell for the first time since 2014, in part reflecting renewed weakness in the region's banking sector as some institutions curtailed their international lending activities, the BIS said.
But with bond yields at historically low levels, bond issuance rose, lifting total euro credit to non-euro residents by 4.2% to $2.3 trillion, the Switzerland-based BIS said.
