BRUSSELS, 27 May 2016 - Academics and bank experts gathered today at the ESBG office in Brussels for the workshop "Savings in a World without Interest" to discuss the low interest rates environment that Europeans currently face and the main challenges for savings and retail banks. To provide a historical perspective to the discussion, they looked into fiscal and monetary policies and savings behaviour in different countries and periods of time and which measures have proven to be successful to promote savings and gain economic growth and financial stability.
After a welcome by WSBI-ESBG Managing Director Chris De Noose, five panellists presented their research on a related topic. The UK's Sheffield University Management School Professor Josephine Maltby presented Insurance and Investment: Savings Banks and Asset-based Welfare. She argued that personal savings for pension is a new kind of welfare, that represents a transition from insurances of citizens as a group to investment in people as individuals. "It has though common features with the introduction in the 19th century of savings as a substitute for other forms of welfare via savings banks", she says.
Andreas Hoffmann, from the University of Leipzig, Germany, compared Savings and Investment Imbalances during the Great Depression and the Recent Global Crisis. He elaborated on channels through which ultra-low interest rate-policies have contributed to a decline in investments and growth in the world economy. He observed that in many countries the low interest rates led to a growth in political polarization, and policies which aimed at curtailing the negative side effects of ultra-loose monetary policies such as minimum wage and rent controls, added further distortions and additional drag on growth.
Views from outside the Eurozone
Pui-Tak Lee, a research officer and honorary assistant professor at the University of Hong-Kong, focused on Savings Business in China during the 1920s-1930s. He told the participants about how lottery as a technique to promote savings – or "lottery" saving – was a great success in China during the country's great depression in the late 1920s. "It continued until 1949 when the communist regime took over", he said.
Zeliha Sayar, from Turkey's Yildiz Technical University discussed the role of Low Interest Rates on preferences of Savings in Turkey. She highlighted that in the 1950s in Turkey an inverse relationship between interest rates and savings was observed: the savings rate rose despite negative real interest rate. According to her, this was mainly due to bank campaigns and branch banking, which were able to develop a real saving habit in the country.
Skype session with panellist
Garrick Hileman from the Cambridge Centre for Alternative Finance & London School of Economics, joined the workshop through skype. He presented the Origins and Measurement of Financial Repression: the British Case mid-20th Century. Hileman spoke about how policies associated with financial repression played an important role in sustaining post-war Britain's record-setting levels of public debt. "Further research is necessary on who were the winners and losers of low interest rates", he concluded.
Following a discussion among all participants, DSGV's Thorsten Wehber, who heads the association's Documentation Centre on Savings Banks History, led the workshop wrap-up.
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