Bundesbank releases Distributional Wealth Accounts for households in Germany

New dataset shows the development of the wealth situation along the wealth distribution at a quarterly frequency  

The Distributional Wealth Accounts (DWA) represent a new experimental dataset that combines two data perspectives: namely, they link the Bundesbank’s Panel on Household Finances (PHF) with the national accounts statistics. These statistics are now also available for other euro area countries. The DWA now enable analyses to be carried out at the household level. Differences in the development of the wealth situation along the wealth distribution are now more visible.

Experts from the European System of Central Banks collaborating in various expert groups have, since 2015, endeavoured to link the data from household surveys with the national accounts statistics for the household sector within a consistent analytical framework, thereby closing existing data gaps. Ultimately, the dataset resulting from the work of the expert groups contains valuable information from both sets of statistics: it takes into account the distributional information from the household wealth survey at the individual household level, as well as the quarterly dynamics and levels of the national accounts statistics for the period since 2011. In this context, the DWA record stocks held by various households for the following types of assets and liabilities: deposits, debt securities, listed shares, investment fund shares, life insurance and annuity entitlements, financial and non-financial business wealth, housing wealth and liabilities in the form of mortgages and other debt. The net wealth of a household is calculated as the difference between total assets and liabilities. 

The data from the DWA indicate that there are significant differences in the composition of households’ wealth along the wealth distribution. For example, the assets held by households in the bottom half of the distribution consist predominantly of low-risk forms of investment, such as deposits and insurance claims. By contrast, the wealth structure of more wealthy households includes a much greater volume of capital market instruments and, above all, housing and business wealth.

The DWA for the household sector also show a high level of overall wealth inequality, although this has declined slightly over the last years. The reason for this is that net wealth has grown particularly strongly for households in the bottom half of the wealth distribution, albeit from a low level. When assessing the impact of monetary policy, it may generally be helpful to bear in mind the financial differences between households, as the effectiveness of monetary policy measures depends, amongst other things, on the distribution and structure of wealth. It is precisely against this backdrop that the future provision of the DWA seems of particular interest to central banks.