How savers are quietly dispossessing themselves

Europe’s savers are quietly losing wealth: trillions are sitting in non-interest-bearing accounts while inflation erodes purchasing power.

It has long been known that most savers are risk-averse. They want security and place their savings where they believe they will be safe. The problem is that, precisely in these places, the loss of value is not merely a possibility but inevitable. European households are estimated to hold around EUR 14 trillion in bank accounts, where it shrinks in real terms year after year, eroded by inflation.

“The problem is not new, but it is becoming increasingly acute,” according to Thorsten Fischer of Moventum AM. The inflation rate recently stood at 2.9 per cent in Germany and as high as 3.8 per cent in the United States. Those who want to keep their money in supposedly risk-free investments are seeing it slip through their fingers. Inflation acts like an invisible wealth tax: slow, steady and barely perceptible politically. At the same time, banks benefit from this behaviour. High deposits remain a cheap source of refinancing for them, while rising interest rates stabilise their margins.

A structural conflict of objectives is becoming more pronounced: while governments increasingly rely on private pension provision and capital market participation, large portions of wealth remain in low-interest deposits. Europe’s economy needs private capital for growth and innovation, yet confidence in the capital market remains limited.

This development has far-reaching consequences for society. An ageing population, combined with low capital market participation and persistent inflation, threatens not only individual wealth in the long term. It also jeopardises the financial resilience of entire economies.

For investors, this should prompt a rethink: liquidity remains important, but persistently high cash allocations can themselves become a risk in an inflationary environment. The central question is shifting from “How safe is my money?” toward “How secure will my purchasing power be in ten years’ time?”