In the latest figures, households in Spain show a notable rise in their holdings of short-term public debt securities, with an increase of 18.523 million euros recorded at the close of July. The Bank of Spain published these results on Friday, marking the highest level since detailed statistics began in 2002. This rise contrasts with July 2022, when households held 25 million euros in these securities, and represents an 11.5% year-on-year increase, driven by growing household demand for treasury bills and other short-term instruments. The trend signals a shift in the appetite of families to hold government paper, particularly as monthly gains begin to outpace earlier months.
Behind these movements lies a broader policy backdrop. The European Central Bank (ECB) has been working to cool inflation in the euro area, having raised its key rate from 0% to 4.5% since July 2022. The deposit facility, which pays banks for reserves held with the central bank, turned from a negative rate to a positive territory, moving from -0.5% to 4%. This shift has heightened interest in government bonds. In July last year, Treasury auctions offered yields ranging from -0.198% for three months to 0.702% for one year; by July of the following year, the corresponding terms showed higher returns of 3.531% and 3.804%, reflecting the rate environment created by the ECB.
Household demand for bonds has also influenced how banks approach term deposits. Banks have been slow to raise term deposit rates despite higher official rates, a stance that has supported the relative appeal of bond investments for households. Average new-deposit rates rose modestly, but remained below the euro-area average, which stood at about 2.83% at the time. In the summer months, roughly 90.5% of household savings were held in current accounts at very low rates, around 0.12%. Savings locked in term deposits did increase, rising by 27,044 million euros and surpassing 40% growth versus July of the previous year. Overall, households’ combined banking balances, including accounts and deposits, declined by around 11,400 million euros to 988.457 million, underscoring shifting liquidity preferences amid evolving interest conditions.
largest creditors
Among the holders of Treasury securities, households once again stand out as the dominant force. The Treasury, which is the leading issuer in the domestic market, has surpassed banks to become the largest creditor for the first time in the data series, with households accounting for 26.08% of the 71.018 billion euros in securities. A year earlier, households held a minimal share, and the current figure shows households holding a noticeably larger portion of these instruments while other sectors such as banks, corporations, mutual funds, public administrations, insurers, pension funds, and the Bank of Spain themselves have smaller shares. The data also show a decline in holdings by foreign investors and a reduced weight across several sectors compared with June 2022.
The latest auctions suggest that both the interest paid on new issues and the demand for Treasury debt have remained relatively stable, aligning with the ECB’s ongoing rate adjustments. The state continues to fund its debt at a high level of interest, consistent with the country’s macroeconomic trajectory and the policy stance of the ECB. Across maturities, bonds and bills with terms longer than one year show household participation but with varying intensity. In July, households invested 1.892 million euros in long-term securities, while the total investment in these instruments reached 949 million and was up by roughly 100% from the previous year, albeit down from June by about 30 million. Investment in debt securities issued by autonomous communities rose modestly over the year, while private household investments in equities also moved higher.
In summary, July reflected a continuing reallocation by Spanish households toward government securities, supported by the higher ECB rates and the relative attractiveness of state debt compared with bank term deposits. While household ownership of Treasury instruments has grown, other sectors have adjusted their shares, and the overall composition of the investor base shows evolving dynamics as Spain and the euro area navigate a challenging debt environment. The Bank of Spain and the Treasury will likely continue to monitor demand for bills and bonds, ensuring that the issuance calendar remains aligned with funding needs and market conditions across Europe. (Sources: Bank of Spain data and ECB policy communications)