While analysts usually focus on the saving rate as a share of current income and funds flow, some argue that a more relevant measure of saving adequacy is not the portion of current income set aside for saving but rather the change in net worth. And in this regard, the picture of household saving looks more favorable than suggested by the saving rate.
Still more has to happen for Europe to return to sustainable growth, however. A functioning resolution mechanism benefits not just financial stability, but also growth. That is because it ensures that banks really do fulfil their allocation function and do not, as “zombie banks”, harm growth. This enhances the efficiency of the real sector.