The toolkit
Governments with big debts borrow cheaply from their own savers: they steer savings to the state, hold the return below inflation and block the exits; in a crisis they rewrite the deal.
Examples and their dates reviewed .
Take the tourThe postwar playbookFilter
Instruments
64 instruments · 142 examples
Steer · Captive demand
Statutory liquidity ratios met with government securities
Banks become a captive buyer base for government paper regardless of yield, so the state borrows below market rates out of depositors' money.
India (in force) · Bangladesh · UK · Spain
Steer · Captive demand
Treasury-bill floors and coverage coefficients for banks
Bank deposit growth is automatically recycled into short-term Treasury paper at administered rates, consolidating floating debt and guaranteeing take-up of new bills.
France · Belgium
Steer · Captive demand
Minimum government-bond shares for pension funds and insurers
Long-term household savings held by pension and insurance intermediaries are locked into sovereign paper, creating a price-insensitive domestic investor base that holds yields down.
Turkey (in force) · India (in force)
Steer · Captive demand
Reserve requirements payable in government paper
A non-negotiable regulatory holding is converted into a guaranteed outlet for new government debt, giving the Treasury a captive buyer whose demand is set by deposit volumes rather than yield.
Italy · Argentina
Steer · Captive demand
Voluntary war-bond drives and patriotic savings campaigns (moral suasion)
Social and workplace pressure plus convenience mobilise household savings into fixed-rate government paper during high-deficit periods, often at rates that wartime inflation later erodes.
UK · US · Canada
Steer · Captive demand
Forced placement of provident-fund and social-security reserves in government debt
Compulsory retirement contributions become a large, permanent and price-insensitive source of state financing, with members credited an administered rate rather than a market return.
Singapore (in force) · Malaysia · Japan
Steer · Captive demand
Mandatory deposits with the Treasury ('circuit du Trésor')
Money held in captive deposit circuits becomes zero- or low-cost sight borrowing for the Treasury, covering deficits 'automatically' without market issuance or central-bank advances.
France · Italy (in force)
Steer · Captive demand
Mandatory investment of postal and small-savings deposits in government securities
Retail savings gathered through the post-office network are converted directly into state borrowing without any market test of the rate the government pays.
UK · India (in force) · Japan
Steer · Captive demand
Mandatory investment of public trust and insurance funds in government securities
Surplus contributions are lent to the treasury in non-marketable or marketable bonds, financing deficits without market discipline.
US (in force)
Steer · Prudential sovereign bias
Zero risk weights for sovereign exposures
Makes government debt the cheapest asset for banks to hold in capital terms, tilting bank balance sheets toward the sovereign and lowering its funding cost.
International · EU (in force) · US (in force)
Steer · Prudential sovereign bias
Liquidity Coverage Ratio Level 1 treatment of government bonds
Banks needing a liquidity buffer are pushed to hold large, permanent stocks of sovereign paper, creating structural captive demand.
International (in force) · EU (in force) · US (in force)
Steer · Prudential sovereign bias
Large-exposure and concentration-limit exemptions for sovereigns
Removes the diversification ceiling that would otherwise cap banks' holdings of government paper, enabling the sovereign-bank 'doom loop'.
International (in force) · EU (in force)
Steer · Prudential sovereign bias
Leverage-ratio exclusions for government securities and central-bank reserves
Frees balance-sheet capacity for banks to absorb government bond issuance and central-bank reserves without needing extra capital.
US · Canada · EU (in force)
Steer · Prudential sovereign bias
Insurance solvency rules exempting sovereign bonds
Insurers can match long liabilities with government bonds at no capital cost, steering policyholder savings into sovereign debt.
EU (in force)
Steer · Prudential sovereign bias
Money-market-fund reforms favouring government-debt funds
Cash-like savings migrate from private-paper funds to government MMFs, creating a large captive buyer of Treasury bills.
US (in force) · EU (in force)
Steer · Prudential sovereign bias
Stablecoin reserve rules requiring short government debt
Turns stablecoin issuers into structural buyers of Treasury bills, channelling crypto-dollar savings to government funding.
US (enacted, not yet in force)
Steer · Prudential sovereign bias
Fund diversification-limit exemptions for government securities
Lets retail funds concentrate savings in sovereign debt and lets governments rely on fund demand without diversification limits.
EU (in force)
Steer · Prudential sovereign bias
Collateral eligibility waivers and favourable haircuts for government bonds
Keeps sovereign paper financeable at the central bank, sustaining bank demand for it even when market risk rises.
Greece
Steer · Tax incentives
Tax exemptions for interest on public debt
A higher after-tax return steers portfolios toward public debt and lets public issuers borrow at lower pretax yields.
US (in force) · Hungary (in force)
Steer · Tax incentives
Capital-gains exemptions for government securities
The tax advantage increases demand for state liabilities and can substitute a sovereign claim for privately held inflation hedges.
UK (in force) · India
Steer · Tax incentives
Tax-exempt national savings accounts and certificates
Tax relief recruits household deposits directly into government funding instead of competing private investments.
UK (in force) · Ireland (in force)
Steer · Tax incentives
Inheritance and gift-tax exemptions for public debt
Estate-planning incentives favour government securities over other stores of wealth and can reward long holding periods.
Italy (in force) · Ireland (in force)
Steer · Directed credit
Mandatory priority-sector lending quotas
Administrative allocation replaces part of market-based credit selection and shifts financing costs or risks onto banks and potentially depositors.
India (in force)
Steer · Directed credit
Mandatory recycling of postal and regulated savings
A large retail deposit base supplies administratively allocated financing to government projects and public borrowers.
Japan · France (in force)
Hold · Rate caps
Deposit-rate ceilings
A binding ceiling reduces savers' nominal returns and the funding cost of banks holding public debt, potentially producing negative real returns.
US · China · Japan
Hold · Rate caps
Prohibition of interest on current accounts
Savers must supply zero-interest transaction balances, reducing banks' funding costs and allowing inflation to erode those balances.
US · India
Hold · Rate caps
Officially supported deposit-rate agreements
Coordinated pricing prevents banks from bidding up returns to savers and preserves low funding costs.
China (in force) · Hong Kong
Hold · Rate caps
Administered savings rates and formula overrides
Administered rates prevent competition or inflation from fully feeding through to saver returns and reduce the cost of policy funding.
Brazil (in force) · France
Hold · Rate caps
Window guidance and supervisory pressure on bank pricing and lending
Administrative pressure substitutes for market pricing and can ration credit while maintaining low interest rates.
Japan · China
Hold · Rate caps
Bank lending-rate ceilings
Limits on bank asset yields suppress the returns banks can offer savers and ration private credit, potentially making public debt relatively attractive.
Bangladesh
Hold · Rate caps
Usury laws and all-in credit-return limits
A binding limit removes high-return private lending opportunities and can prevent nominal yields from adjusting fully to inflation or credit risk.
France (in force) · Canada (in force) · Japan (in force)
Hold · Central bank financing
Treasury overdrafts and ways and means advances
Money creation bridges government financing needs without first obtaining voluntary savings at market yields.
UK · India (in force) · Philippines
Hold · Central bank financing
Direct central-bank subscriptions to government securities
The state obtains newly created central-bank money directly rather than having to sell the entire issue to private savers.
Japan · Canada · Algeria
Hold · Central bank financing
Central bank as residual buyer of government debt
The Treasury can resist market-clearing yields because undersubscription is met by central-bank financing.
Italy · Indonesia
Hold · Central bank financing
Automatic deficit financing through Treasury bills
Budget shortfalls automatically generate monetary liabilities instead of forcing tax increases or market borrowing.
India · Germany
Hold · Central bank financing
Government bond yield pegs and yield curve control
Price support holds government borrowing yields below the level that would clear the market without central-bank purchases.
US · Japan · Australia
Hold · Central bank financing
Reserve-financed government bond purchases (QE)
Purchases remove duration risk from private portfolios, raise bond prices and reduce the state's market financing costs.
US · UK
Hold · Central bank financing
Maturity extension and Operation Twist
Removing long-term duration from the market compresses term premiums and cheapens long-term government finance.
US · India
Block · Capital controls
Comprehensive exchange controls on payments and capital transfers abroad
By closing the exits, it traps domestic savings inside the currency area, where they can be held at negative real rates and steered into government debt without leaking abroad.
UK · Malaysia · Iceland
Block · Capital controls
Surrender and repatriation requirements for foreign currency and gold
They transfer hard-currency and gold holdings from savers and firms to the state at a fixed price, removing the main hedge against currency debasement and feeding official reserves.
US · Argentina (in force) · Russia
Block · Capital controls
Quotas on residents' foreign-currency purchases and outward remittances
By rationing access to foreign currency it limits how much household savings can be moved into foreign assets, keeping them in domestic deposits and bonds that pay below-market or below-inflation returns.
China (in force) · Argentina · India (in force)
Block · Capital controls
Interest equalization taxes on residents' purchases of foreign securities
By wiping out the extra yield of foreign securities it keeps domestic savers in home-currency assets at lower domestic rates, supporting cheap domestic borrowing and the balance of payments.
US
Block · Capital controls
Mandatory limits and approval regimes for outward investment
By blocking capital from leaving through corporate investment channels, it keeps savings and corporate cash inside the domestic system and supports the currency and the government's financing base.
US · China (in force)
Block · Real asset restrictions
Gold ownership limits and licensing of dealing
Restricted legal access to bullion or coins reduces the ability to switch savings out of domestic financial claims.
UK · US
Block · Real asset restrictions
Bans on cryptocurrency trading and exchange businesses
Closing crypto markets obstructs an alternative asset and cross-border transfer route outside the regulated domestic savings system.
China (in force)
Block · Real asset restrictions
Exclusion of crypto users and exchanges from banking
Removing access to fiat payment channels makes it harder for savers to enter or exit alternative crypto assets.
India · China
Block · Real asset restrictions
Prohibition of cryptocurrency payments
Requiring domestic payment money prevents alternative assets from becoming a parallel settlement and savings system.
Turkey (in force) · Indonesia
Block · Real asset restrictions
Limits on cash payments
Restricting cash's usefulness channels balances and payments into regulated institutions, making escape from deposit-rate or withdrawal policies harder.
Spain (in force) · France (in force)
Block · Real asset restrictions
Rent freezes and fixed base-date rents
Suppressing nominal rental income reduces property's ability to protect savers against inflation and can make regulated financial savings relatively more attractive.
US · UK
Block · Real asset restrictions
Caps on rent increases
When permitted increases lag prices or costs, the real income from rental savings falls and property becomes a weaker inflation hedge.
Germany (in force) · UK
Block · Real asset restrictions
Restrictions on financing foreign real-estate purchases
Savings that cannot readily buy foreign property remain more exposed to domestic currency, inflation and regulated financial claims.
China · India
Block · Real asset restrictions
Household property ownership quotas and eligibility tests
Households excluded from additional property purchases must choose other savings outlets, potentially including deposits and government debt.
China (in force) · Singapore (in force)
Block · Real asset restrictions
Punitive purchase taxes on additional homes
The tax wedge lowers the relative return on property investment and can steer savings toward financial assets while raising government revenue.
Singapore (in force) · UK (in force)
Block · Transaction taxes
Bank debit and credit taxes
It raises cheap, hard-to-evade revenue from the stock of bank money and penalises moving savings through the financial system, eroding returns on deposits that are not already captured by the state.
Argentina (in force) · Brazil · Colombia (in force)
Block · Transaction taxes
Taxes on foreign-currency purchases and outward transfers
It raises the cost of moving savings into foreign currency or foreign assets, keeping domestic savings captive in local-currency instruments the state can tax or borrow from.
Argentina · Brazil (in force) · US (in force)
Rewrite · Extraordinary measures
Deposit freezes, bank holidays and cash-withdrawal limits
Savers cannot exit deposits into cash, foreign currency or foreign accounts, so their balances can be eroded by inflation, devaluation or later conversion while the banking system and state keep the funding.
Argentina · Brazil · Greece · Cyprus
Rewrite · Extraordinary measures
Forced conversion of foreign-currency deposits and contracts (pesification)
Dollar savers are paid in depreciating local currency at a below-market rate, transferring wealth from depositors to banks, debtors and the state.
Argentina
Rewrite · Extraordinary measures
Nationalisation or transfer of private pension assets to the state
The state captures a large stock of household savings, cancels its own bonds held by the funds or gains a captive buyer, and replaces property rights with unfunded pension promises.
Argentina · Poland
Rewrite · Extraordinary measures
One-off levies on bank deposits or wealth
The state takes a slice of accumulated savings directly, with no chance for savers to move funds once the reference date has passed.
Italy
Rewrite · Extraordinary measures
Compulsory or forced loans to the state
The state raises funds that look like debt rather than tax, repays them later in depreciated money or illiquid paper, and so extracts a hidden levy on savings.
Brazil · Argentina
Rewrite · Extraordinary measures
Bail-in of depositors and retail bondholders
Savers above the insured limit, or retail holders of bank bonds, absorb bank losses directly, and the threat of bail-in pushes them toward insured deposits and government paper.
Cyprus
Rewrite · Extraordinary measures
Compulsory surrender (confiscation) of private gold
Savers lose their inflation and devaluation hedge just before or as the currency is devalued against gold, transferring the revaluation gain to the state.
US · Australia
Rewrite · Extraordinary measures
Abrogation of gold, currency and indexation clauses
Creditors, including holders of government bonds, are repaid in nominal depreciated money instead of the real value they contracted for.
US · Argentina (in force)
Rewrite · Extraordinary measures
Forced exchange or reprofiling of domestic debt and deposits
Domestic holders, who cannot easily exit, are forced to accept late or reduced repayment, lowering the state's financing cost at their expense.
Argentina