The problem of how to finance the economy

We look at the situations of the euro zone and France. The key problem of financing the economy is well known: households want risk-free savings, while the economy has an increasingly risky borrowing requirement (due to the energy transition, financing of new technologies, start-ups, etc.). There are then three solutions: The status quo , where financial intermediaries (banks, insurance companies, etc.) collect risk-free savings and hold risky assets. Here, risk is intermediated by financial intermediaries, which must then hold a growing quantity of capital; Government intervention, which helps to transform risk-free savings into risky loans to the economy by guaranteeing the public sector banks that intermediate this risk; Households accepting riskier savings, reducing the need for private financial intermediaries or governments to transform risk-free savings into risky loans. In reality, all three methods will probably be used: growing role for banks and insurers, especially if regulation s for insurers are appropriate; growing role for public banks; incentives to steer households into riskier savings (unit-linked funds, direct share ownership).