EU explores account freezes to prevent runs at failing banks

https://www.reuters.com/article/us-eu-banks-deposits-idUSKBN1AD1RS

European Union states are considering measures which would allow them to temporarily stop people withdrawing money from their accounts to prevent bank runs, an EU document reviewed by Reuters revealed.

The move is aimed at helping rescue lenders that are deemed failing or likely to fail, but critics say it could hit confidence and might even hasten withdrawals at the first rumors of a bank being in trouble.

The proposal, which has been in the works since the beginning of this year, comes less than two months after a run on deposits at Banco Popular contributed to the collapse of the Spanish lender.

It also come amid a bitter wrangle among European countries over how to deal with troubled banks, roughly a decade after a financial crash that required the European Central Bank to print billions of euros to prevent a prolonged economic slump.

Giving supervisors the power to temporarily block bank accounts at ailing lenders is “a feasible option,” a paper prepared by the Estonian presidency of the EU said, acknowledging that member states were divided on the issue.

EU countries which already allow a moratorium on bank payouts in insolvency procedures at national level, like Germany, support the measure, officials said.

“The desire is to prevent a bank run, so that when a bank is in a critical situation it is not pushed over the edge,” a person familiar with German government’s thinking said.

To cover for savers’ immediate financial needs, the Estonian paper, dated July 10, recommended the introduction of a mechanism that could allow depositors to withdraw “at least a limited amount of funds.”

Banks, though, say it would discourage saving.

“We strongly believe that this would incentivize depositors to run from a bank at an early stage,” Charlie Bannister of the Association for Financial Markets in Europe (AFME), a banking lobby group, said.

The Estonian proposal was discussed by EU envoys on July 13 but no decision was made, an EU official said. Discussions were due to continue in September. Approval of EU lawmakers would be required for any final decision.

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thanks to xxx for the link..

“The desire is to prevent a bank run, so that when a bank is in a critical situation it is not pushed over the edge,” a person familiar with German government’s thinking said.”

cant have the slaves getting what is rightly theirs now can we?

“European Union states are considering measures which would allow them to temporarily stop people withdrawing money from their accounts to prevent bank runs, an EU document reviewed by Reuters revealed.”

the door has nearly shut..

“We strongly believe that this would incentivize depositors to run from a bank at an early stage,”

no shit..if they cant get their money they cant create a bank run can they? duh..

401

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~ by seeker401 on August 3, 2017.

3 Responses to “EU explores account freezes to prevent runs at failing banks”

  1. Satire on the account:
    EU countries, “So banks may fail”
    Germany, “To keep the money in the bank lock out the people from their own money”
    Estonian paper, “Yet if people need money to pay their rent, let them have a limited amount.”
    Banks to Estonia, “But then people will not keep their money in the bank”
    “Yeah, but their bills”
    “But money will not be in the bank”
    “Their bills?”
    “Yeah, but the banks need the money”
    EU, “Ok, sounds like a solid argument to consider keeping the money in the banks. We might let you know in September”

  2. Reblogged this on World4Justice : NOW! Lobby Forum..

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