FRANKFURT AM MAIN: Members of the European Central Bank's governing council are concerned that rising private-sector borrowing in France could threaten financial stability, minutes from a December meeting published Thursday showed.
"It was remarked that loan growth in the euro area's second largest economy had seen rather buoyant expansion," according to the minutes, which never identify individual speakers.
"Increasing leverage in conjunction with increased merger and acquisition and leveraged buyout activity raised concerns from a financial stability perspective," the record added.
The rate of credit growth to non-financial businesses across the whole eurozone picked up to 3.1 percent year-on-year in November, a regular ECB survey recently showed.
In France, firms' demand for loans leapt in the months following the election of President Emmanuel Macron, who swept to power in May on a platform of rejuvenating the economy and reorganising the 19-nation eurozone.
July brought increases of more than 25 percent in demand for credit among both large and small-to-medium sized firms, Bank of France figures show, with a further 22-percent boost for big companies in October.
Stoking increased lending across the single currency area has been one of the ECB's top priorities in recent years.
It has set interest rates at historic lows, offered cheap loans to banks and bought almost 2.3 trillion euros ($2.75 trillion) of government and corporate bonds, aiming to fire economic growth and coax inflation towards its target of just below 2.0 percent.
But some on the governing council have warned that keeping the money sluices open for too long might threaten financial stability, as firms, households and governments could be tempted to borrow more than they can repay.
Excessive borrowing was one of the main causes of the 2008 financial crisis, and nations, companies and ordinary people have since spent years paying off old debts in a process known as "deleveraging".
Increased debt is taken seriously enough among policymakers that it merited a mention among the biggest risks that could threaten the eurozone's economic recovery.
"It was flagged that downside risks also stemmed from increasing leverage in some sectors in a few euro area countries and, more significantly, in other parts of the world," the minutes note.
However, overall ECB chiefs see risks as "broadly balanced" -- meaning the eurozone economy might just as easily perform better than expected as worse.
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