As apparent from the chart, after showing some signs of instability during the years leading up to the collapse of Bretton Woods, inflation increased dramatically after 1971, reaching, at the euro area-wide level, a peak of 13.6 per cent in the fourth quarter of 1974.
Banks are likely to be especially cautious about making new loans and financing commitments while substantial uncertainty about the quality of loans and the extent of demands from previous commitments persists. So it would not be surprising to see lessgenerous credit for a wide variety of loans to business and households.