(Ecofin Agency) - The value of all financial assets in the world increased by almost 10% in 2020 to €200 trillion. This amount takes into account all bank deposits, as well as the total value of financial securities and assets held in financial accounts and pension funds. The estimates are made by insurance company Allianz.
This increase occurred in a year marked by one of the deadliest pandemics in recent decades with hundreds of millions of people losing their jobs worldwide. Many countries are still struggling to recover. Governments in some rich countries have set up a backup plan to support their populations and companies that had no real opportunities to consume or even invest in concrete activities. Under these conditions, the outstanding bank deposits have exploded, up almost 12%, the first time in a long time. In some cases, countries have had to go into debt to support these response policies.
Africa had also experienced an increase in the balance sheet of banks and an increase in outstanding deposits. The second factor that drove the value of financial assets is corporate debt and equity. The S&P 500, which includes the 500 largest companies on US stock exchanges, has seen a solid increase, driven by tech stocks. Several countries and companies have also issued bonds to finance their covid-19 response plans. The outstanding holdings in insurance companies and pension funds have also contributed.
Over the period under review, the value of decentralized digital currencies has reached $2 trillion, thanks to sustained demand from several categories of investors. However, this increase in financial wealth has not benefited everyone, especially in Africa where a large portion of the population lacks access to financial opportunities.
For many people in the region, the downturn in consumption came with great hardship, as it is the daily purchases that keep some people going. The rise in the value of financial assets goes together with an even greater rise in the debt of companies and governments in rich countries. Sub-Saharan Africa suffers less from both phenomena.