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Savings : demand deposits continue to fly high

The French are increasingly investing on their current accounts. Between the lack of sufficiently remunerative alternatives and a wait-and-see attitude, the phenomenon is persisting and reaching new heights.

BPCE L'Observatoire
Epargne - Dépôts à vue

A desire to invest their money but....

Certain trends are being confirmed and persist: a steady increase in investments in demand deposits, an upsurge in investments in regulated passbooks, and a dynamic life insurance market. These are the main conclusions of the new edition of the Rendez-vous de l’Epargne savings reports published by BPCE’s Research & Prospective Studies department.

“After fresh inflows of more than €33 billion in 2017 and 2018, demand deposits are expected to grow by €38.2 billion this year and by €30 billion next year. This level is quite unprecedented,” says Éric Buffandeau, Deputy Director of Research at BPCE. The French have let nearly €15 billion build up on their accounts since the beginning of the year, making demand deposits the leading savings product in France.

The reasons? Always the same: “An environment of negative interest rates, low inflation and a perception of an increasingly sophisticated and professional stock market that discourages them from seeking slightly better-paid investments. All of this fosters a kind of wait-and-see attitude.”
 

Regulated passbook accounts are also popular

And, apart from letting their balances increase on their current accounts, savers are showing greater interest in passbook savings accounts, whether regulated (excluding LEP) or not, and life insurance (1). The same positive signals are visible in life insurance, with inflows of €13 billion and a sharp recovery in euro-denominated products, whose aggregate inflows have become almost equivalent to those of unit-linked products. This can be explained by measures taken to protect French purchasing power and the continued high distribution of home loans. In addition, the estimated savings rate stands at 15% in 2019 and 2020.

Is this an indication of what will happen over the rest of the year? In any case, these elements are indications of changes in household behavior. To be continued....

(1) In May 2019, the aggregate total of deposits on the Livret A passbook savings account (excluding the capitalization of interest) was €7.6 billion, €2.8 billion on the Livret de Développement durable et solidaire (Sustainable development and solidarity passbook savings account) and €7.4 billion on the Livret B-CSL.

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