The reason that most clients with a conservative profile prefer bank deposits over public debt is not due to their profitability or taxation.
Treasury bills at 1 year (public debt) in the last auction offered a negative return of -0.333% (average interest rate of the auction of 01/15/2019), while deposits at the moment offer something more than 0%
The taxation of public debt and deposits is identical, considering income from movable capital in the personal income tax.
If it is not a reason for profitability or taxation, why does the private investor prefer deposits to public debt?
Two could be the answers, with a clear relational link:
- It is perceived that the financial institution with which one works is safer than the State.
- The nature of investment in public debt is unknown.
The money deposited in accounts and deposits is guaranteed by the Deposit Guarantee Fund (FGD), up to 100,000 euros per person and entity. It draws on the contributions of the attached financial institutions and, extraordinarily, on the contributions of the Bank of Spain.
If the bank files a bankruptcy and cannot return the deposits, the FGD would act. Therefore, in the first instance the bank or box responds unlimitedly and in a second moment the FGD up to 100,000 euros.
The public debt is guaranteed unlimitedly, right protected by the Constitution itself in its article 135. The State guarantees the payment of the nominal amount (and the implicit interests), without this item being modified in the General State Budget under any circumstances. .
Deposits or public debt same security?
Is it safer to have money in bank deposits than in public debt?
The answer is no. If Spain could not meet its public debt payment obligations, we would face a truly catastrophic scenario. National banks would also see their solvency compromised, since much of the Spanish sovereign debt is in their balance sheets.
If the public debt is as much or safer than the deposits and also currently more profitable, why does the bank client not want or can not invest in it?
Because it is an uninteresting product for the bank, which does not actively market it. Deposits generate own funds for the entity, so in need of liquidity at the moment. The debt generates liquidity for the state. And what the branch director says goes to Mass; At least until the financial crisis arrived.