To avoid another crisis, reduce liquidity for savers

We use the euro zone as an example to illustrate our point. The persistence of low long-term interest rates is lead ing investors to switch to higher-yielding illiquid assets: High Yield, real estate, infrastructure, private equity, leveraged loans, etc. This gives rise to the risk of a liquidity crisis , in which retail savers would want to sell , while investors (institutional investors, investment funds, etc.) have bought illiquid assets, leading the prices of these assets to collapse and the liquidity crisis to become a n across-the-board solvency crisis. To avoid this type of crisis in an environment of very low yields on liquid assets (government bonds, Investment Grade bonds, etc.), the only solution is to restrict the liquidity available to savers in the various investment classes (funds, insurance contracts, etc.).