Banks take such decisions based on factors like their financial strength, their risk aversion and the demand for credit by non-financial corporations and private households. So we should not make simplistic assertions about one factor leading to another. We should ask: what are we seeing in the data? Looking at credit growth in the euro area, we see few signs of distortions.
The LTROs have certainly prevented an abrupt deleveraging. But loans to the euro area private sector increased by only 1.1% in February, compared with an average of around 7% since the start of the euro. Looking at capital flows to other parts of the world, we see a broadly balanced picture.