They could also think about investing their excess money for some real returns.
The article also fails to mention that bank deposits are only gauranteed up to 100k as well, so if you have a bunch of cash sitting around it is wise to spread it around different institutions anyway.
I’ve never quite understood -- can’t the bank do that for you?
If the obstacle is that savings accounts are expected to have a guaranteed rate with zero risk, the banks ought to provide very easy access to investment accounts, with the ability to move money around frictionlessly.
Is there just no demand for that kind of service, or regulatory problems, or something of that kind?
Edit to add: I always felt that offset mortgages (https://en.wikipedia.org/wiki/Flexible_mortgage#Offset_mortg...) were a nice solution to this problem; it gives you a place to stash your savings and get a reasonable rate of return (basically matching your mortgage rate) while still being accessible if needed. But they seem to have gone out of fashion again, at least in the UK. Anyone know if there was some problem or disadvantage (either to consumers or to the banks)?
You want them to tell you you have a fixed, gauranteed rate of return and use it to buy some apple stock or some bitcoin with it?
The answer is they can do it for you, they do, do it for you, but you have to sign up for the gambling account not the instant access cash savings account.
I guess there ought to be some safeguards, e.g. at least XX% of your money in a safe place. But there’s a point at which safeguards become friction that just stop you investing at all.
For example, in the UK you have ISA accounts, which should work like that, but the restrictions are so annoying (yearly cap on deposits) and the benefits so weak (tax exempt, but on a pitiful interest rate so it makes no difference for most people) that they’re not very useful. Unless I’m missing something.
Your investment options are limited to actual investments basically, so essensially shares. Term deposits dont seem to be a big thing in the UK for whatever reason, and we dont have the US tax breaks to buy municipal bonds etc.
ISA's are great, you can go buy some apple stock or some FTSE funds or depending on the provider one of 1000's of funds with it. 'Cash ISAs' while rare are still around are no better or worse than a savings account (IMO).
This is a good nudge for me to look around for better/easier options to store petty cash in, so I’m going to do that. Thanks!
Current best instant access rate is around 0.65%.
Government bonds? Corporate bonds? Stocks? Crypto?
Are you willing to cover their potential losses with government guarantees?
Savings accounts are supposed to be a safe storage of money. They have certain insurance guarantees because of that. Encouraging banks to use that money to speculate is exactly what you don’t want them to do. Savings banks are not known to employ the most brilliant investment minds.
What's the CFO going to do when Eurobonds are negative too ?
Converting it un-necessarily into another currency introduces exposure to forex risk.
"Investing", aside from the risk, is not cash or cash-equivalent, so that's out of the question.
Hence the best answer is generally just splitting out into multiple Euro bank accounts.