The graph below shows how bank credit growth in the United States has slowed significantly in recent months.
The situation in Europe has been similar. The demand for loans from corporate customers has been declining, according to commercial banks.
Nonetheless, central banks should be concerned about the slowdown of bank lending, credit development will not occur until the private sector creates new loans, and money supply growth will stall.
If money supply growth isn’t picking up, it’s likely that a big part of the risk asset rally is over due to a lack of liquidity (from stocks to junk bonds to metals).
If this happens, asset price deflation would lead to the private sector debt deflation needed to clean up the economy.