Central banks have flooded the Eurozone with so much cheap credit that average borrowing rates between banks have dipped into the negatives, meaning that banks are basically paying other financial institutions to take their money, according to the Wall Street Journal.

The Euro Short Term Rate (ESTR), the interest rate that financial institutions in Europe use to lend and borrow from each other once the LIBOR was discredited, slid to negative 0.555 percent last night, only slightly higher than the record-setting negative 0.557 percent rate at the start of this week.

This is because, like the Federal Reserve here in the United States, central banks across Europe have been working hard to support the economy through the pandemic's chaos, which has involved, at least in part, generous loans to businesses and banks. This has left credit institutions there with €2.9 trillion in reserves, far more than they are required to reserve. Further compounding the plummeting rate is that more are borrowing directly from the European Central Bank rather than the interbank lending market, which has pushed both demand and prices down.

As low as rates are right now, the Journal said they could go even lower should the ECB or other central banks decide to intensify their stimulus measures, as they might if the pandemic continued on.

While the flood of stimulus cash has no doubt done much to prop up the economy, it has also raised concerns of increasing the numbers of what are colloquially known as "zombie companies," that is, firms that can only stay alive through constant injections of new credit rather than by creating value. Last year, a Swiss Bank of International Settlements study estimated that 12 percent of all public companies are zombies. More recently, an analysis from Deutsche Bank said that this number is now closer to 18 percent, close to one in five firms worldwide.

The CEO of Deutsche Bank yesterday raised the issue again, saying that such companies would become a drag on the German economy if not addressed soon. The Bank of International Settlements, on the same day, released a study showing how this can happen, the abstract saying that "zombie firms are smaller, less productive, more leveraged and invest less in physical and intangible capital. Their performance deteriorates several years before zombification and remains significantly poorer than that of non-zombie firms in subsequent years." While 60 percent of firms revive themselves out of zombie status, they remain at high risk of becoming a zombie again. An earlier BIS study also pointed out that, like dandelions in a rose garden, zombie firms can crowd out more productive firms by taking up resources, such as staff and capital, that could have gone to them instead.

Zombies are proliferating here in the United States as well, if an analysis by the New York Fed last month is any indication. It found that a third or more of companies in the oil and hospitality sectors could be thought of as zombies, as the cost of servicing their debt exceeded their ability to bring in cash, meaning they will have to borrow to make up the difference.