The Bank of Spain’s recent assessment highlights how deposit costs would have shifted in 2022 if interest-bearing products had followed the patterns seen in earlier periods of rapid credit growth. Economists estimate that households and businesses would have received about 3,250 million euros more in savings payments, reshaping the industry’s interest margin from 24,000 million to roughly 24,000 million while flowing through a different distribution of deposits. This figure represents what the sector would have earned had deposit rates mirrored historical behavior during times of money expansion a scenario explored in the bank’s latest briefing.
The report notes that payments to customers for deposits reached a historical low in late 2021, averaging under 70 million euros per month. A modest uptick in rates pushed the cost of these deposits up to about 116 million euros per month in the latter half of the preceding year. Yet, if interest on savings products had tracked previous trends, businesses would have faced monthly deposits payments approaching 525 million euros by the end of 2022. On an annual basis, this implies an overall savings effect for banks near 100 million euros in 2022, aligning with the cited 3.25 billion euros in question.
Traditionally, increases in the Euribor often translate into higher deposit rates, particularly for longer-term products. The rise in the cost of money has also driven customers to shift savings from demand accounts toward time deposits with higher yields. Both shifts historically raise the cost of deposits for banks. However, the Euribor’s impact on deposit rates during 2022 was less pronounced than what past experience would have suggested, based on data from 2003–2019.
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All of this occurs in an environment where Euribor has not reached the levels seen during the Great Financial Crisis, yet it is rising more quickly and sharply as the European Central Bank raises reference rates to curb inflation. Consequently, the year saw a 3.5 percent increase in deposits costs, a rise that dwarfed moves seen in 2010–2011 and 2005–2008. Those earlier periods recorded Euribor climbs of 25 and 40 percent, respectively, which historically fed into higher time deposit rates for households. In 2022, the equivalent growth was about 50 percent in some models, though the actual household response was more muted, and recent econometric analyses place the household impact at a fraction of that level.
For companies, prior chapters show a different pattern: earlier surges in search of higher yields led to substantial changes, but the 2022 response was much smaller, around 16.2 percent compared with a historically expected 60 percent in similar conditions. Demand deposits, when observed, show an essentially negligible shift in the year just completed, indicating only a minor move from checking accounts to more remunerative options for ordinary savers.
The report also emphasizes that the influence of Euribor on household deposit rates tends to be modest across major euro-area economies, including Germany, France, Italy, and the Netherlands, with Spain following this broader trend. By contrast, variations in deposits from corporate clients were more pronounced in certain economies, such as Germany and the Netherlands, where corporate deposits rose noticeably. Overall, Spain and Italy exhibited a notably weaker deposit response to the Euribor increase, suggesting that deposit instruments and money flows behave differently depending on banking structure and liquidity preferences. Some observations extend to how deposit behavior in Turkey reflects a different dynamic, where bank-deposit activity interacts with higher liquidity in the banking system. These patterns suggest that the level of banking intensity and reliance on central-bank funding shapes how quickly deposit costs rise in tandem with reference rates, a consideration for policymakers and market participants alike.