Why are savings banks important in the financial system?

Savings banks play a crucial role in the financial system by facilitating savings for individuals and providing mortgage loans. They are designed to encourage individuals to save money by offering various savings products, which not only help consumers to build wealth but also contribute to overall economic stability.

By providing mortgage loans, savings banks help individuals achieve home ownership, which is a significant milestone for many families. This function supports the housing market and, in turn, stimulates economic growth. The deposits collected from savers provide the necessary capital for these banks to lend to those seeking mortgages, creating a cycle of saving and lending that benefits both individuals and the economy as a whole.

The focus on individual loans and savings aligns with the mission of savings banks to promote financial security for households, making this option the most representative of their importance in the financial system.