FRANKFURT: The decline in lending to euro zone households and companies slowed further in July, and money supply grew as the European Central Bank's latest stimulus measures slowly find their way into the economy.

In an unprecedented move, the ECB started charging banks in June to keep their deposits overnight, a step it hopes will encourage banks to lend.

A fresh injection of ultra-long loans later this year should make lending easier still.

The central bank is also putting the bloc's top banks through a thorough review of their balance sheets to weed out soured loans, update collateral valuations and adjust capital so that they can give out loans more freely in future.

This will also, however, take time to take full effect. ECB data showed on Thursday that loans to the private sector fell by 1.6 percent in July from the same month a year earlier after a contraction of 1.8 percent in June.

Euro zone M3 money supply - a more general measure of cash in the economy - grew at an annual pace of 1.8 percent, up from 1.6 percent in June.