Cyprus Levy on Bank Accounts
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Sad to see this happening.
What is the effect going to be throughout the rest of Europe
because surely some people will think "EU - better be careful".
The result is people being wary of having money in banks
if this type of unilateral decision is being made.
I agree with Nutloose, in the end it will make things worse.
What is the effect going to be throughout the rest of Europe
because surely some people will think "EU - better be careful".
The result is people being wary of having money in banks
if this type of unilateral decision is being made.
I agree with Nutloose, in the end it will make things worse.
which has been dropping hints about negative interest rates
I'm posted to Cyprus this Summer and this really worries me
) or can you just maintain your UK account and pay everything by card / bank payment? Granted there will be charges/commission to pay and perhaps unfavourable exchange rate conversions but in the short term your money will be "safe" in the UK (although of course with a budget this weeks Mr O may see this as a great way to actually reduce our national debt.....). Perhaps the MOD will reinstate pay parades. Or have your salary sent out to you in Euro Travellers cheques!
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Wrathers,
The High Street banks will then have to pass on those costs to you and I because the money that they will have been charged on will be (our) account holder deposits.
500,
The unfairness of the Cypriot situation is that the depositers have been pinged but corporate bondholders haven't. The retired nurse in Limassol will have placed her money into the Pop (or wherever) for safekeeping but the Goldman Sachs etc bond dept will have been invested in order to speculate on a return. But who got stung again - is that retired nurse the victim of immorality? It is sad too, that savers with smaller amounts weren't protected.
Cyprus didn't want to jeopardise its long-term prospects as an offshore financial centre for Russian and other money. So it taxed everyone up to 10% instead of punishing the launderers 100%; the default course of action these days for lazy and scared regulators. Still, saving wealthy Russians looking for a back door into the EU was always going to be tricky. It'll be interesting to see what happens with money in Latvia now; where do these Russians place their money?
If it wasn't for the Germans running things behind the scenes and raising the stakes, this bailout would have gone largely unnoticed. Evidence (if ever any was still needed!) that we are still in a very fragile condition. But this sort of measure, to para phrase Churchill, is like standing in a bucket of merde and trying to lift it by pushing up on the handle.
The High Street banks will then have to pass on those costs to you and I because the money that they will have been charged on will be (our) account holder deposits.
500,
The unfairness of the Cypriot situation is that the depositers have been pinged but corporate bondholders haven't. The retired nurse in Limassol will have placed her money into the Pop (or wherever) for safekeeping but the Goldman Sachs etc bond dept will have been invested in order to speculate on a return. But who got stung again - is that retired nurse the victim of immorality? It is sad too, that savers with smaller amounts weren't protected.
Cyprus didn't want to jeopardise its long-term prospects as an offshore financial centre for Russian and other money. So it taxed everyone up to 10% instead of punishing the launderers 100%; the default course of action these days for lazy and scared regulators. Still, saving wealthy Russians looking for a back door into the EU was always going to be tricky. It'll be interesting to see what happens with money in Latvia now; where do these Russians place their money?
If it wasn't for the Germans running things behind the scenes and raising the stakes, this bailout would have gone largely unnoticed. Evidence (if ever any was still needed!) that we are still in a very fragile condition. But this sort of measure, to para phrase Churchill, is like standing in a bucket of merde and trying to lift it by pushing up on the handle.
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George Osbourne has just stated that anyone serving the country in Cyprus will be compensated for their losses....
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Al R
Yes, I had noticed that no mention of corporate bank accounts had been made.
It's always the case, the little guys get stung.
Either way, it's not a good look for EU regardless of how someone
whitewashes it because it was the EU finance ministers that were involved.
I think you will find people look at the way they save in a very different way
in the EU in the future, Just my HO.
Yes, I had noticed that no mention of corporate bank accounts had been made.
It's always the case, the little guys get stung.
Either way, it's not a good look for EU regardless of how someone
whitewashes it because it was the EU finance ministers that were involved.
I think you will find people look at the way they save in a very different way
in the EU in the future, Just my HO.
Last edited by 500N; 17th Mar 2013 at 10:31.
"The result is people being wary of having money in banks if this type of unilateral decision is being made."
When you deposit money into a countries banking system you depend on that country to protect your deposit. It is not the responsibility of the EU or the UK (in the case of the Icelandic banks) to provide deposit protection for EU banks.
The EU has just protected 90-94% of depositors money in a country that has been know to be bad for several years.
They should be glad they got anything back, some depositors in Icelandic banks got 0% for the first couple of years and its rose to 90% a few years later.
The Germans have paid 10Billion for this bailout and depositors 5billion.
When you deposit money into a countries banking system you depend on that country to protect your deposit. It is not the responsibility of the EU or the UK (in the case of the Icelandic banks) to provide deposit protection for EU banks.
The EU has just protected 90-94% of depositors money in a country that has been know to be bad for several years.
They should be glad they got anything back, some depositors in Icelandic banks got 0% for the first couple of years and its rose to 90% a few years later.
The Germans have paid 10Billion for this bailout and depositors 5billion.
Last edited by peter we; 17th Mar 2013 at 10:55.
Al
I'll bow to your professional knowledge but I still don't think we would end up having to 'pay' to invest.
The idea of the BofE going for negative interest rates was to force banks to lend rather than stockpile cash (at least this is how I understood it - clicky). As for costs - you could argue that, with a negative interest rate for bank to bank dealings, if the high street banks lent the money to joe public rather than 'investing' it with BofE (where they would pay for the privilege) they firstly wouldn't be paying the financial penalty and secondly they would be receiving interest from those they lent to. The economy gets a kick start and people/businesses can get the money they need.
Or am I just looking at it too simplistically?
I'll bow to your professional knowledge but I still don't think we would end up having to 'pay' to invest.
The idea of the BofE going for negative interest rates was to force banks to lend rather than stockpile cash (at least this is how I understood it - clicky). As for costs - you could argue that, with a negative interest rate for bank to bank dealings, if the high street banks lent the money to joe public rather than 'investing' it with BofE (where they would pay for the privilege) they firstly wouldn't be paying the financial penalty and secondly they would be receiving interest from those they lent to. The economy gets a kick start and people/businesses can get the money they need.
Or am I just looking at it too simplistically?
I still don't think we would end up having to 'pay' to invest.
However, if a country and its banking system is controlled by criminals (e.g. Iceland) then the banks can collect deposits without any intention or ability to repay it. EU law doesn't allow much control over this, but it seems they are willing to pay for it. Thanks Germany.
Or am I just looking at it too simplistically?
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Peter
"When you deposit money into a countries banking system you depend on that country to protect your deposit."
Agree but doesn't always occur as we see here.
"It is not the responsibility of the EU or the UK (in the case of the Icelandic banks) to provide deposit protection for EU banks.
The EU has just protected 90-94% of depositors money in a country that has been know to be bad for several years."
You are forgetting that the psuchology of people, the individual will not see it that way, they see it in the "I" sphere, could this happen to "me". Whether it could or not, they don't have the information to decide, all they will see is the
words "EU", "Finance ministers" and "unilateral decision" and that in
itself will put the wind up the population.
Runs on banks are caused by the "I" factor. Everyone knows that causing
a run on banks makes the situation worse but that doesn't stop 100% of
the population trying to withdraw all of their money even if it affects
the other 99% of people in a negative way, they don't care.
"When you deposit money into a countries banking system you depend on that country to protect your deposit."
Agree but doesn't always occur as we see here.
"It is not the responsibility of the EU or the UK (in the case of the Icelandic banks) to provide deposit protection for EU banks.
The EU has just protected 90-94% of depositors money in a country that has been know to be bad for several years."
You are forgetting that the psuchology of people, the individual will not see it that way, they see it in the "I" sphere, could this happen to "me". Whether it could or not, they don't have the information to decide, all they will see is the
words "EU", "Finance ministers" and "unilateral decision" and that in
itself will put the wind up the population.
Runs on banks are caused by the "I" factor. Everyone knows that causing
a run on banks makes the situation worse but that doesn't stop 100% of
the population trying to withdraw all of their money even if it affects
the other 99% of people in a negative way, they don't care.
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Peter
When the banks re open and restrictions lifted, do you honestly think
people will leave their money in the bank that someone has just
taken 10% of ?
I doubt it. I wouldn't and would never trust the banking system again
or the EU for deciding it can go ahead.
As someone in the thread of JB said, what if these decisions are made
again in countries that have received a bail out - but the second time
they need money the EU finance ministers decide that a 10% skim
from all bank accounts should occur instead of money being provided
by the EU or one of the EU countries ?
This is why I think it will have a negative effect across the whole of Europe.
When the banks re open and restrictions lifted, do you honestly think
people will leave their money in the bank that someone has just
taken 10% of ?
I doubt it. I wouldn't and would never trust the banking system again
or the EU for deciding it can go ahead.
As someone in the thread of JB said, what if these decisions are made
again in countries that have received a bail out - but the second time
they need money the EU finance ministers decide that a 10% skim
from all bank accounts should occur instead of money being provided
by the EU or one of the EU countries ?
This is why I think it will have a negative effect across the whole of Europe.
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Wrathers,
I agree with your assesment - the BoE wants the banks to lend - 'Project Merlin' failed - and if the banks are receiving loans from interest, George Osborne is a happy boy.
But Lloyds TSB etc won't pay BoE whilst its customers simply sit on their cash without some attempt to use the customers to share the pain. Banks aren't even trying to lure cash in.. RPI is over 3% and a half decent instant access savings rate is just 2% so savers are in negative territory anyway. In effect, they ARE exposed to the effect of negative rates.
Gilt yields will also fall (the basis for annuities) which would mean even lower pension payouts - if you were considering going down that route. Whether the pain manifests itself directly as higher charges or indirectly, as even lower savings rates, the pain will be shared by those who don't do something to prevent it.
I agree with your assesment - the BoE wants the banks to lend - 'Project Merlin' failed - and if the banks are receiving loans from interest, George Osborne is a happy boy.
But Lloyds TSB etc won't pay BoE whilst its customers simply sit on their cash without some attempt to use the customers to share the pain. Banks aren't even trying to lure cash in.. RPI is over 3% and a half decent instant access savings rate is just 2% so savers are in negative territory anyway. In effect, they ARE exposed to the effect of negative rates.
Gilt yields will also fall (the basis for annuities) which would mean even lower pension payouts - if you were considering going down that route. Whether the pain manifests itself directly as higher charges or indirectly, as even lower savings rates, the pain will be shared by those who don't do something to prevent it.
Last edited by Al R; 17th Mar 2013 at 13:10.
Yes, I had noticed that no mention of corporate bank accounts had been made.
That sounds like a recipe that is likely to lead to civil disobedience, i.e. rioting, looting and a general breakdown in law and order.
No doubt the politicians will say they didn't see it coming - the law of unintended consequences!!
No doubt the politicians will say they didn't see it coming - the law of unintended consequences!!
I can also see that happening Biggus. The Electric Board, Water Board, Ports Authority and the Cyta telephone companies are all state owned and are now to be privatised. Those boys will strike/Pickett outside the Presidential Palace in Nicosia for that, as they have done in the past. That's only one step away from rioting Greek style.