Bank alarm: in 15 months 61 billion euros burned from current accounts
The rise in the cost of money by the European Central Bank has changed the cards on the table for households and businesses. In the mix between interest rates and inflation, the wealth accumulated over the years runs the risk of going up in smoke in the short term. The unbridled race in prices, the more onerous loans and the loss of purchasing power, an analysis by Fabi points out, are some of the major consequences of an economic mechanism that undermines the Italians’ treasure and continues to put their saving capacity to the test .
Between December 2021 and March 2023, the total current account balance of households and businesses fell by over 61 billion euros, from 2,076 billion to 2,015 billion; in just three months, from December 2022 to March 2023, the negative change amounted to over 50 billion. Meanwhile, the gap between the trend in interest rates applied to loans and mortgages and those on deposits and accounts is widening more and more. If the former have increased significantly over the years, the others have remained almost unchanged, demonstrating how, according to Fabi, credit institutions have “little interest in rewarding those who deposit their liquidity in the bank”. A reality that is confirmed by the profits as at 31 December 2022 of the major Italian credit institutions, equal to 12.8 billion euros, up 66% on 2021, a sign of increasing revenues, lower credit costs and unchanged operating expenses.
From the analysis of current accounts and deposits over the last two years, a sign of general suffering clearly emerges because the erosion of liquid assets in household and business portfolios leaves no doubts about the support that the “piggy banks” of the Italians have guaranteed the country’s economy, but also on the difficulties that they continue to experience in preserving their accumulated liquidity. Italian households boasted deposits on bank accounts of approximately 1,163 billion euros at the end of 2021 and 1,174 billion euros in December 2022, while the liquidity on account held by businesses stood at 428 billion euros at the end of 2021 and 423 billion euros at the end of 2021. last December. Overall, the two components exceeded 1,500 billion at the end of last year which, together with the liquid assets of non-profit organizations, social security institutions and insurance companies, almost reached the ceiling of 2,015 billion at the same date, against 2,076 billion euros at the end of 2021.
The overall drop in deposited resources in just three months has reached a good 50 billion euros, spent to cover consumption and investments. If all forms of deposits in bank accounts are analysed, the total deposits “looted” by Italians from December 2021 up to March 2023 are over 61 billion euros. useful for coping with the economic damage suffered by inflation and the reduced purchasing power. In the face of a period of credit crunch, also due to the effect induced by the surge in variable rates, drawing on one’s liquid accounts by sacrificing savings remains the only lifeline. This is how the overall balance of deposits and current accounts in December 2021 was 2,076.8 billion euros, contracted to 2,065.5 billion already in December 2022, and then further decreased to barely 2,000 billion at the end of the first quarter of 2023 At the same date at the end of 2022, medium-long term time deposits of savers held 153 billion euros, down by 2.4 billion (-1.6%) on an annual basis and down doubled to 4, 1 billion (-2.6%) between December 2022 and last March.
The red alert on Italian savings appears, with greater vigor, at the end of the first quarter of 2023 when it is evident that the economic difficulty in chasing the rise in prices with one’s own income capacity continues, in fact, to heavily erode the liquidity of the system. At the end of last March, household deposits contracted by 2.14% – reaching a value of 1,149 billion euro. In just three months, a good 89.5 billion euros were burned on current accounts alone, almost 5 times what was drawn from Italian reserves in the previous twelve months (or 21.9 billion euros).
In March 2023, the current liquidity balance amounted to €1,368 billion, against €1,458 billion at the end of 2022, with a drop of 6.1% in value. The contraction, which had already started between 2021 and 2022, was confirmed in the first months of 2023, as an increasingly evident sign of a climate of tension for households and businesses.
The purchasing power of salaries back 25 years
“Inflation is the most unjust of taxes, because it mainly affects those on low incomes and with little savings. In short, the risk is that of seeing social inequalities increase. The purchasing power of salaries, unfortunately, has gone back 25 years”, comments the general secretary of Fabi, Lando Maria Sileoni.
“The solution must be sought in the renewal of the collective labor agreements – he continues – some of which have even expired for more than five years, with significant economic increases. Those who have liquidity in their current account are particularly affected because their money is worth less and less. This is why it is essential that the banks, which have benefited from the increase in the cost of money, now return a part of those benefits to customers by raising interest rates on current accounts”.
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