Today shows the M4 money supply numbers out from the Treasury to be unchanged.

The likes of Barclays (LON:BARC), RBS (LON:RBS) and Lloyds Banking Group (LON:LLOY) are faced with an impossible task of protecting customer deposits while simultaneously increasing lending.

This is the view of CEO of the London Capital Group, Simon Denham, commenting ahead of the latest M4 money supply figures.

At the time of writing Britain's broad money supply was unchanged in June, provisional data from the Bank of England showed on Tuesday.

The annual rate of M4 growth rose slightly to 3.0 percent from May's series low of 2.7 percent.

Denham says:

"Today sees the M4 money supply numbers out from the Treasury and readers will know that we occasionally like to comment on growth prospects with a falling M4 (i.e. how difficult it is). 

"Politicians like to berate ‘the banks’ about lending more money whilst at the same time requiring ever greater ‘protection’ for ‘tax payers’ and less ‘casino’ antics on the part of the trading units, it never seems to cross their minds that these requirements are incompatible with each other.

"Basle 3 has loaded even more capital requirements onto the financial institutions and the UK is suffering (as is the rest of the world to a certain degree) from the retrenchment of most banks into their own domestic markets. 

"This has left Barclays, RBS, Lloyds Banking Group and HSBC with a big hole to fill.  Understandably, with problems of their own, they are finding it difficult. 

"M4 is expected to be just 1pc YOY and actually down for the month which does make one wonder where on earth the £225bln of QE has gone."

Lloyds Banking Group and RBS are under particular pressure to increase lending,

George Osborne and Vince Cable will jointly launch a consultation paper on how to increase lending by setting new targets this week.
 
Such is the importance of the issue to the Coalition that the announcement was brought forward so it did not happen when both Cabinet ministers were on a trade trip to India later in the month.