The challenge for the euro zone to use its private sector savings surplus intelligently

Since the subprime crisis, the euro zone has had excess private sector savings over investment despite very low real interest rates. Its private savings surplus will probably be even greater after the COVID crisis. The challenge for the euro zone will be to use these excess private savings intelligently : t hey will be lost for the euro zone if they are lent to the rest of the world ; g overnments may use them inefficiently by financing unproductive public spending. The ideal scenario would be for the excess private savings to be used to finance potential growth-enhancing public investment s . Japan provides a n example not to be followed . Its huge private savings surplus since the 1990s has been partially lent to the rest of the world and partially used to finance an inefficient fiscal deficit.