Cross-border deposits: growing trust in the euro area

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Cross-border deposits: growing trust in the euro area

24 October 2024

By Matthias Rumpf

To what extent are euro area households making use of cross-border deposits? Are households in smaller countries more likely to open accounts abroad and, if they do so, which countries do they choose? This ECB Blog post discusses the trends of cross-border deposits within the euro area. The data is derived from bank balance sheets and is collected by the ECB in cooperation with the national central banks. It is also available in the ECB Data Portal.

Recent trends in cross-border deposits

One of the advantages of the monetary union is access to financial services in euro area countries other than your own. These might be interesting because of higher interest rates on deposits or more convenient banking products. In reality, however, citizens have rarely used the services offered by foreign commercial banks. The cross-border share of total deposits even trended downwards until 2005, and then stagnated at a relatively low level until 2014. Recently, however, private households have increasingly made cross-border deposits with banks in other euro area countries. While the volume still is relatively low, it is growing at an impressive rate. The trend gives an idea of what a complete banking and capital market union could look like in the future.

In August 2024 euro area households had a total of around €151 billion in accounts with euro area banks outside their home countries. This corresponds to around 1.6 percent of all household deposits with euro area banks. While this share is small, it represents a significant jump from the figure of €95 billion at the beginning of 2020, which equalled 1.2 percent of all household deposits in the euro area (Chart 1).

As Chart 1 shows, the rate of increase in cross-border deposits remained strong over the period between mid-2022 and September 2023, when the ECB raised interest rates. This suggests that households may indeed have been seeking better conditions for their savings. However, the fact that the trend started earlier does mean that other factors, such as increased cross-border marketing by online banks, are also likely to have played a role.

France, Luxembourg, Germany and Italy are the countries in which banks have received the greatest volume of cross-border deposits from other euro area countries. Italy recorded the highest growth in absolute terms over the past five years, with deposits from other countries nearly doubling since 2022 (Chart 2). Interestingly, the share of deposits from other euro area countries is highest in Luxembourg (37 percent), Estonia (20 percent), Lithuania (16 percent), Malta (10 percent) and Latvia (6 percent), indicating that smaller countries receive a relatively high level of foreign deposits (Chart 4).

Because balance sheet data cover the entire euro area, they can also be used to calculate the deposits held abroad for each country. In the second quarter of 2024, for example, German households accounted for €51.5 billion, or more than one-third of cross-border deposits in the euro area, followed by France (€15.8 billion) and the Netherlands (€13.7 billion). Germany and the Netherlands also account for most of the growth in cross-border deposits since the beginning of 2020 (Chart 3).

Looking at the shares of inbound and outbound deposits by country reveals further differences. For example, Luxembourg, Estonia and Lithuania saw significantly more deposits from euro area households in other countries coming into their banks than deposits being made by households in their countries going abroad. In the case of Cyprus, Greece and Slovenia, however, the situation is exactly the opposite (Chart 4).

The share of deposits from non-domestic households in the euro area is small but has grown substantially over the past years. Higher interest rates and interest rate differentials are likely to have contributed to this development, but cannot explain the entire trend. Other factors such as digitalisation and offers from online banks may also have contributed.

The views expressed in each blog entry are those of the author(s) and do not necessarily represent the views of the European Central Bank and the Eurosystem.

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Related topics

• Euro area
• Banking union
• Capital markets union