Individuals and businesses withdrew €71 billion from their European bank accounts in February. A lot of money has been withdrawn, especially in southern Europe, and this is logical according to economist Edin Mujagic. “People are withdrawing money because they need it to make ends meet. Per capita income is lower in southern Europe, so you can imagine that people need more money.’
According to Mujagic, the second reason people withdraw their money from the bank is the great turmoil in the banking landscape lately. “People worry about what will happen if their bank is gone. And then you mainly talk about people and parties who have savings accounts with more than 100,000 euros, they will spread it all around».
savings interest
Another explanation is that Europeans are moving funds from their checking account into a savings account, because they are paying interest on it for the first time in a long time. According to Mujagic, the fact that interest rates are rising sharply at some banks has everything to do with competition. For example, from this month ING Germany will grant new and existing account holders 3% interest on savings deposits with a term of six months, while ING Netherlands will only grant 1.55% interest for a term of three years. “Germany has a factor of four more inhabitants. We have just over eighty banks, in Germany there are almost 1,500 banks. This is just competition for savings, and then interest rates go up.’
Mujagic doesn’t believe the huge asset shift is because people, out of some sort of distrust of the government and the banking sector, are converting their money into cash or fixed-value investments like gold and silver. ‘If you look at these figures, you see that it’s mostly about transferring funds and using money to pay bills. It’s very little about taking money from the bank because you’re afraid of something.’
Source: BNR
Andrew Dwight is an author and economy journalist who writes for 24 News Globe. He has a deep understanding of financial markets and a passion for analyzing economic trends and news. With a talent for breaking down complex economic concepts into easily understandable terms, Andrew has become a respected voice in the field of economics journalism.
