ECB QE: Finally The Credit Impulse Is Here?

European business is typically more dependent on bank credit than other developed economies. And in this regard, 2014 has been a study in contrast. While the loan demands from both businesses and consumers turned a corner start of the year, the banking system was stubbornly tight with supply. One can assume, among other things, one reason of that was the Asset Quality Review (AQR), that incentivized the banks to keep balance sheets in checks, perhaps at the cost of new business.

Now that the AQR is over. With the newly announced QE, and improving credit demand, Euro area is finally seems poised to realized the much expected creditimpulse economists have been talking about for years.  The January survey already shows signs of that. The QE could not have come with a better timing.

This present a big upside to Euro area economy as whole and particularly for European equities.