Europe households keep 10 trillion euros in cash

That matters because money held in deposits or real estate does little to finance innovation, productivity growth or industrial expansion. The ECB argues that a deeper retail investor base could help fund technology, energy, infrastructure, defense and digitization while also improving long-term returns and diversification for households.

The divide is especially pronounced among richer savers. More than 65% of the wealthiest 20% of U.S. households own listed stocks, bonds or mutual funds, compared with less than 45% in the euro area. Across the currency bloc, more than 60% of households keep most of their wealth in property, around a quarter mainly save through bank accounts, about 10% invest indirectly via pensions and insurance, and only 4% are direct, meaningful capital-market investors.

Croatia fits that pattern. European Commission data showed 43.6% of Croatian household assets were in cash and deposits at the end of 2024, above the EU average of 31.7%, while the country’s former finance minister said only 3.5% of households owned shares. At the same time, appetite for domestic government paper is growing, with about 37,000 citizens investing roughly 2 billion euros in a recent round of treasury bills.

The ECB says the problem is not just access. Risk perception, low financial literacy and weak trust in markets are the main barriers keeping households on the sidelines, which is why simpler products, pension reform, financial education and savings-and-investment accounts are being pushed as part of the bloc’s broader savings and investment union.

For investors, the issue cuts two ways: Europe’s capital markets could get a durable new source of domestic demand if reforms succeed, while banks, deposit-heavy savers and property markets remain the current winners from the status quo. The next test is whether policymakers can persuade households to move money out of idle balances and into productive assets without taking on risks they do not understand.