Cologne Institute of German Business Warns of Deposit Protection May Not Survive in Europe

https://d33wjekvz3zs1a.cloudfront.net/wp-content/uploads/2018/05/Euro-Crisis-1.jpg

 

The Cologne Institute of German Business sees in the planned European deposit insurance is simply incapable of proving protection against a bank crash in Europe. The EU deposit guarantee is simply not practical under any concept of austerity. The Eurozone still has inherent significant risks in the balance sheets of European financial institutions. This is primarily because where the USA took the bad loans from the banks and stuffed them into Freddie and Fanny, in Europe, the bad loans are still on the books of the banks. Systemically, this has been the leading problem why Europe has been unable to recover and Quantitative Easing merely robber savers of their income and it failed completely to stimulate the economy. Banks were still reluctant to lend and people would not borrow if they did not have confidence in the future. Continue reading

Greece misses bailout deadline as talks with creditors drag on

The deadline to dispense further rescue loans to debt-stricken Greece was extended by eurozone countries once again on Sunday amid continuing deadlock between Athens and its creditors.

With negotiations still bogged down over failure to agree on a new foreclosure law – legislation the leftist-led government says would push austerity-hit Greeks over the edge – lenders postponed a critical Eurogroup Working Group until Tuesday. Continue reading

ECB risks crippling political damage if Greece forced to default

If Greece is forced out of the euro in acrimonious circumstances – a 50/50 risk given the continued refusal of the creditor core to acknowledge their own guilt and strategic errors – the country will not only default on its EMU rescue packages, but also on its “Target2” liabilities to the European Central Bank.

In normal times, Target2 adjustments are routine and self-correcting. They occur automatically as money is shifted around the currency bloc. The US Federal Reserve has a similar internal system to square books across regions. They turn nuclear if monetary union breaks up.

A Greek default – unavoidable in a Grexit scenario – would crystallize these losses. The German people would discover instantly that a large sum of money committed without their knowledge and without a vote in the Bundestag had vanished.

Continue reading

Bank of Cyprus Depositors Hand Over 47.5% in Bail In-Source

ATHENS–Large deposit holders at Bank of Cyprus PCL (BOCY.CP) will see almost half of their deposits turned into equity at the lender as part of the country’s international bailout, a senior bank official said Sunday.

After an all day meetings Saturday between President Nicos Anastasiades and representatives from the country’s creditors–its euro-zone partners and the International Monetary Fund–it was decided that 42.5% of all deposits over 100,000 euros ($132,764) will be converted into shares as part of its recapitalisation plan, the official said. Continue reading

Bank of International Settlements Forges ‘Simple Plan’ to Avoid Bank Bailouts in Market Crash

The Bank for International Settlements has crafted a plan to inject major lenders with more cash, in the event of financial failure, while avoiding market chaos and the need to use taxpayers’ money.

According to BIS’ paper, the central bank forum laid out blueprints on how to recapitalise banks quickly and easily, while also allowing authorities to give an ironclad guarantee that insured depositors would not lose savings. Continue reading

ECB Says Cyprus Bailout Triggered Mini-Bank Run

If the raid on Cypriot depositors and subsequent bank run could happen in Cyprus, it could happen in the rest of Europe, as demonstrated. If it can happen in Europe, it can also happen in America. In Cyprus’ case, it will take generations to recover.

The euro zone’s messy bailout of Cyprus caused a mini-run on banks in many of the currency union’s 17 members in April, exacerbating the decline in lending to the real economy, data from the European Central Bank showed Wednesday. Continue reading