Financial wealth of euro area households
3 December 2020
In the euro area, households’ financial wealth per capita has been growing over the last ten years. Use Chart 1 to select your country and examine this trend.
Chart 1. Change in financial wealth per capita of euro area households (nominal net financial wealth, EUR thousands)
Source: Euro area statistics.
Notes: The average inflation rate during the period was approximately 1.32%. The chart shows the average financial wealth per capita, which may differ from the median financial wealth per capita.
While households’ financial liabilities are primarily loans, their financial assets consist of several instruments, as illustrated in Chart 2 below.
Chart 2. Breakdown of euro area households’ financial assets for the second quarter of 2020 (percentages)
|■||Currency and deposits||■||Insurance, pension and standardised guarantee schemes||■||Equity|
|■||Debt securities||■||Investment fund shares/units||■||Other|
Source: Euro area statistics.
Note: For the category “other”, financial assets include loans, financial derivatives, employee stock options and other accounts receivable and payable.
In the euro area, at the end of the second quarter of 2020 almost 70% of the financial assets of households comprised currency and deposits, as well as instruments held with insurance companies (mainly life insurance) and pension funds. A closer look at country-level data reveals some variations concerning the use of different financial products.
In three euro area countries, households held approximately 60% of their financial assets in the form of currency and deposits (Greece – 65%; Slovakia – 61%; Cyprus – 60%).
By contrast, because of the specific pension system in the Netherlands, almost 70% of financial assets held by Dutch households were in the form of insurance, pensions and standardised guarantees, and only 15% were in the form of currency and deposits. There were only two other euro area countries where the insurance, pensions and standardised guarantees asset class was the most significant: Ireland (47%) and France (37%). Estonian, Lithuanian and Finnish households seem to prefer riskier investments, as shares and other equity assets represented 53%, 42% and 38% of their total financial assets, respectively.
Household preferences concerning financial assets may well reflect different national regulations, pension systems, or consumers’ propensity concerning return and risk or for investing in housing, which is not included in financial assets. Please read the Explainer accompanying this Insight for more details about financial wealth.
In this Insight, households’ financial wealth refers to net financial wealth. Net financial wealth is the difference between the value of households’ financial assets and the value of their financial liabilities. The level of households’ financial wealth is an important factor driving long-term consumption choices and growth. Together with future expected income, it determines the level of resources available to households.
The household sector (European system of accounts (ESA) 2010, S.14) consists of individuals (or groups of individuals) as both consumers and as entrepreneurs producing market goods and non-financial and financial services (market producers), provided that the production of goods and services is not performed by separate entities treated as quasi-corporations. The sector also includes individuals (or groups of individuals) as producers of goods and non-financial services exclusively for their own final use.
Households’ financial wealth per capita is defined as the total financial wealth of households in a country divided by the number of residents in that country (or in an economic area, such as the euro area). This figure provides a measure of financial wealth by country, scaled by population size.
While households’ financial liabilities mainly consist of loans, the composition of household financial assets by type of instrument is more variable and may provide interesting information about households’ expectations and investment preferences, as well as the level of financial risk they bear.
Household financial assets include the following:
- Currency and deposits
- Debt securities
- Investment fund shares/units
- Insurance, pension and standardised guarantee schemes (pension entitlements are only included in the financial wealth of households in the sector accounts if they relate to funded employment-related private or civil service schemes. Social security pensions, which consist primarily of pensions related to pay-as-you-go systems and make up the bulk of the total estimated stock of pension entitlements in nearly all euro area countries, are not included in household wealth)
- Other financial instruments (this aggregate encompasses financial derivatives, other accounts receivable/payable and trade credit)
Cross-country comparisons should take into account structural differences across the euro area. In some countries, households prefer to invest in non-financial assets, such as housing and land. Households’ loans for housing purchases are included in financial liabilities, but the value of the housing is not considered under financial assets and therefore not included in the calculation of household financial wealth. This may lead these countries to appear less wealthy than others, if you only consider net financial wealth as a measure of household wealth.
Furthermore, both the value and the composition of households’ financial assets are indirectly affected by the structure of the country’s pension system: differences throughout the euro area reflect specific institutional arrangements. Pension systems are made up of three pillars: 1) government mandatory pensions (i.e. social security), 2) occupational pensions (funded employment-related schemes), and 3) individual pension plans. The relative weight of each of the three pillars depends on the institutional context of each euro area country. As explained above, households’ financial assets only encompass the second and third pillars and exclude the first one. As a consequence, countries where the second and third pillars are the weightiest (for instance, in the Netherlands) may appear more wealthy than countries whose pension systems place more weight on the first pillar (which is excluded from households’ financial wealth).
This Insight uses statistics reported in the quarterly financial accounts statistics as submitted to the ECB by the national central banks of the euro area. These statistics are available in the ECB’s Statistical Data Warehouse. This Insight also uses population data released by Eurostat.
Find out more about the financial wealth of households:
“New pension fund statistics” – Economic Bulletin, Issue 7, ECB, 2020
“Social spending, a euro area cross-country comparison” – Economic Bulletin, Issue 5, ECB, 2019
Pension fund statistics are available in the ECB’s Statistical Data Warehouse
For data on population in the euro area, see Eurostat
For data on households’ financial wealth and liabilities, see the ECB’s Statistical Data Warehouse
All data series used in this Insight can be found in the downloadable file at the bottom of the Insight