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In addition to holding its benchmark rate at 0.25%, the ECB also left the rate it pays on bank deposits unchanged at zero. The ECB balancesheet has plummeted to 23pc of eurozone GDP from a peak of 32pc in July 2012. Certainly we would have been better off had the housing bubble bursts in 2003 rather than 2005.
This share was higher than during the pre-crisis period from 2005 to mid-2007. Historical evidence shows that this rarely happens following a balancesheet recession. In the syndicated loan market, for instance, credit granted to lower-rated leveraged borrowers (leveraged loans) exceeded 40% of new signings for much of 2013.
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