Household savings: demand deposits at their highest since 2009

Demand deposits reached a record €422 billion in France at the end of 2018. This was one of the key points presented at the quarterly meeting on French savings organized by BPCE’s Economic Research and Forecasting teams on April 11.

In terms of savings, demand deposits are in big demand with the French public, with households depositing over €33 billion in their bank accounts in 2018. This is the highest amount since 2009 and exceeds the sums deposited in Livrets A and Livrets Développement Durable et Solidaire special savings accounts, despite these also rising significantly. All in all, demand deposits hit a record €422 billion at the end of 2018. And all the signs suggest the movement is set to continue… “Demand deposits accounted for over 80% of French households’ net savings effort in 2018”, underlines Eric Buffandeau, Deputy Head of Economic Research at BPCE.

Savers ever-more wary

The reasons for this popularity? “The uptick in inflation in 2018 and the ensuing desire to maintain the value of the real sums collected, together with the ECB’s low interest rates, which are causing households to adopt a wait-and-see approach in the face of the low returns currently offered by interest-bearing investments“, explains Eric Buffandeau.

“These choices are being made at a time when households are gradually reducing their risk exposure: faced with markets they deem to be too opaque and overly complicated, the French public has shunned securities on a massive scale“, adds Alain Tourdjman, Head of Economic Research at BPCE. For proof, the net outflow in funds, equities held directly and bonds has never been so pronounced, reaching a record of €35.1 billion.   
Only life insurance, which is seen as a “safer investment” seems to find grace in the eyes of households, posting net inflow of €22.8 billion in 2018 versus €8.3 billion in 2017.   

And for 2019? “Savings inflow should make marked progress on the back of sizeable gains in purchasing power, while low interest rates should continue to favor liquid products and life insurance“, specifies Eric Buffandeau. “The first two months of the year have confirmed these trends, both for demand deposits and life insurance“, underlines Alain Tourdjman. Their success therefore looks set to last…