A study by the ECB 9 presented a model that can identify just over 80 per cent of the cases in OECD countries where excesses have later led to costly downward adjustments in the economy. In the IMF’s most recent “World Economic Outlook” 10 the conclusion is more cautious. It is claimed in this study that it is possible at best to identify around half of the excesses (including the most recent crisis) that have later led to significant corrections in developed economies. Both of the studies conclude that (global) credit growth is the best individual indicator of overheating. A study by the Bank for International Settlements (BIS) in 2004 11 also concluded that although it is difficult to find relevant bubble indicators, it is not impossible. The study claims that there are signs of asymmetry as some central banks have a tendency to stimulate the economy when the stock market falls, but not to tighten their policy when stock market bubbles are building up. The conclusions of these studies are that central banks should try in various ways to take into account, for instance, an overly rapid growth in credit that risks leading to a severe downward adjustment in the economy later on. However, it is emphasised in many studies that further research in this field is required to be able to draw more definite conclusions for future monetary policy. The development of this type of indicator is now high on the agenda both nationally and in the international economic policy cooperation.
Let’s be clear on this: French and European savers aren’t going to become Americanised in their savings behaviour or appetite for risk. These transatlantic differences have historical, cultural and sociological roots. And it’s not our role to go into them here, even less try to change them. However, the French debate would be made much easier if we distinguished clearly between the two main objectives underlying savers’ aversion to risk: security and liquidity. With regard to security, or capital protection, this is something that is important for savers. Genuine risk-taking, with all the potential gains it entails, will only ever be for a minority of investors. In the case of liquidity, however, increased life expectancy, lower pension replacement rates and the greater health risks associated with living longer are all pushing French savers to adopt longer and longer investment horizons. We need to be able to offer them suitable savings products: ones that are less liquid, with or without a long-term capital guarantee, and that allow savers to benefit from the higher returns offered by equities over the long term. A crucial point is to avoid any tax distortions that might mean these products are penalised more than liquid and risk-free investments. This level playing field in terms of taxation should also apply to the companies that are financed: in other words we need to avoid making debt financing more attractive than equity financing.