The flow of credit across the euro zone has held up during the financial crisis, but recent weeks have produced "the first signs of falling credit flows," European Central Bank President Jean-Claude Trichet said Monday, in a speech in Paris. Part of the decline is unsurprisingly driven by falling demand as firms postpone investment and households delay spending, he said. However, some of the decline may be tied in part to tightening finance conditions due to deleveraging. "It is here that we have to closely watch developments," Trichet said. "If such behavior became widespread across the banking system, it would undermine the [reason for] the system as a whole." On a positive note, Trichet said rising corporate bond issuance was "noteworthy."

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