Although the rates at which banks lend to each other have eased considerably from their peaks, banks have cut back significantly on the amount of money they are actually lending.
Source: Gluskin Sheff
The fact that the money multiplier is breaking down can be seen from in the US Depository Institutions Aggregate Excess Reserves – which are zero in a normal credit environment – continuing to skyrocket far in excess of the amount that banks need to keep on deposit to meet their reserve requirements. The excess reserves now amount to a record $877 billion and reflect the uncertainty about banks’ balance sheets in view of the fact that the value of some assets is not known.
US Aggregate Depository Institutions Excess Reserves
A peak in the excess reserves should coincide with the global credit system returning to normal levels and liquidity starting to move freely again.