In early 2024, the Deutsche Bundesbank began publishing an innovative dataset for assessing asset distribution among private households in Germany. The** Distributional Wealth Accounts (DWA)** combine data from the Bundesbank's "Private Households and Their Finances" wealth survey with quarterly national economic asset balance data and provide great advantages in terms of timely availability compared to the labor-intensive household survey. This new resource enables quarterly analyses at the individual household level, including investigations into monetary policy implications at the micro level. Previously unseen nuances of how households manage their consumption and savings in response to policy changes, as well as the way wealth distribution influences policy effectiveness are now becoming clearer.

Significantly, the DWA addresses a critical gap in wealth capture. Traditional data sources inadequately represent the very wealthy, creating a skewed understanding of national wealth. The DWA corrects this by offering a more equitable view across all wealth brackets, revealing the diverse investment landscapes - from liquid assets of the less affluent to the extensive capital investments of the rich. The resulting dataset combines wealth survey data with national economic asset balances, offering valuable insights into household wealth dynamics since 2009.

Key findings include a significant increase in median net assets since 2009, particularly in the less wealthy half of households, leading to a slight decrease in wealth inequality until 2014. However, since 2022, wealth inequality has begun to rise again, attributed to factors such as high inflation rates and subdued economic growth. The analysis also reveals fluctuations in the growth rates of net assets across different wealth groups and asset types. While wealth inequality was slightly declining until 2021, it slowly began to rise again since the end of 2022, driven by positive valuation changes in riskier investment forms favoring wealthier households.

Furthermore, the Bundesbank employs the distribution-based asset balance to analyze risks to financial stability stemming from household indebtedness in Germany. Unlike previous methods that focused on aggregated metrics, this approach allows for a detailed examination of household financial situations, including specific groups like homeowners. Key indicators, such as the ratio of liquid assets to debts, help assess risks from liquidity shortages. For instance, while owners typically have liquid assets covering 34% of their debts, renters have a higher coverage at 52%. However, around 30% of indebted households have minimal liquid assets relative to their debts, indicating potential vulnerability to income losses. The analysis also reveals differences in asset structure and savings behavior between homeowners and renters.

The Bundesbank’s dataset has once again confirmed that when it comes to the inequality of the wealth distribution, Germany sits at the higher end of the Gini coefficient scale within the Eurozone. As for the future of monetary policy, the DWA reveals that German households’ reactions have not fundamentally changed, despite shifts in wealth. Still, with the more detailed data, policymakers can refine their approach to target economic levers more effectively.

By combining micro and macroeconomic data the Bundesbank’s work offers an effective model for central banks to better understand and guide economies.