Weekend Economists Down Under May 23-26, 2014

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38. ECB's Mersch: Banks need to be strong enough to meet credit demand

http://uk.reuters.com/article/2014/05/24/uk-ecb-mersch-idUKKBN0E403B20140524

(Reuters) - Euro zone banks need to be strong enough to support a pick up in credit demand to keep the euro zone recovery going, European Central Bank Executive Board member Yves Mersch said on Saturday.

Tougher regulatory standards and a stronger sense of risk-aversion in the wake of the financial crisis have led banks to scale back lending and raised interest rates on loans.

That has made it more difficult for companies, especially smaller and medium-sized ones, to obtain credit to fund expansion or growth.

Mersch said the euro zone had started to recover and was reaching a point where companies could no longer rely on their own funds but were increasingly in need of external funding to keep growing.