Euro zone: The “nationalisation” of the financing of the economy

The euro-zone economy is mainly financed by bank credit, which leads to the well-known situation where banks must make absolutely risk-free liabilit ies (deposits) and risky asset s (loans) compatible, and be perceived as increasingly risky after each crisis. This configuration will inevitably lead to a “nationalisation” of the financing of the economy: To have risky assets and risk-free liabilities, euro-zone banks must hold an increasingly high capital buffer, leading to a low return on equity that does not attract equity investors. The only source of capital increases is self-financing, which leads governments (the central bank) to continually intervene in banks’ decisions regarding compensation and dividends: the management of banks is “nationalised” since it is controlled by governments; If, despite the accumulation of capital, banks cannot bear all the risk of financing the economy, a second form of "nationalisation" of this financing is emerging, with a growing role for public banks, with an increasing number of guarantees for financing provided by governments. In the end, it will only be in countries where it is disintermediated (such as the United States) that the financing of the economy can remain private, and not "nationalised".