Europe Extends Confiscatory Non-Template 'Template' To Interbank Deposits

Tyler Durden's picture

While every European leader, banker, street-sweeper has made a point to use the phrase "Cyprus was not a template" in the last few weeks since D-Boom dropped his tape-bomb, it appears that in reality plans continue to push ahead to indeed 'legalize' these confiscations. As Reuters reports, European Union ministers will consider a proposal this week to impose losses on short-term interbank deposits of lenders. The proposal is part of wider talks to consider when depositors should be bailed-in. Of course, it makes sense that banks should 'not' get special treatment for their overnight lending operations to one another, but the EU leaders want to ensure that these 'sacred' deposits do not escape confiscation, "while it is acknowledged that bailing in interbank liabilities may carry certain risks; on balance, it is preferable... that these liabilities are not excluded from bail-in". Of course, this will worry the ECB as they have worked so hard to unfreeze the interbank lending market post-crisis (with their direct backstops and intermediation). So while there is no template, and Cyprus is unique, it appears the new 'resolution' laws provide a clear plan (not template) for reaching all the way down the capital structure just as they did in Cyprus (and is legally correct from a pari passu basis).


Via Reuters,

European Union ministers will consider a proposal this week to impose losses on interbank deposits of lenders in dire financial trouble as they shape a draft EU law introducing powers that would also penalize those with big savings.


Such an idea, should ministers back it, could further rattle the confidence of lenders, already nervous about draft legislation to determine who alongside shareholders should suffer losses when a bank gets into trouble.




The talks follow the recent decision to impose heavy losses on some depositors in Cyprus, in return for an international bailout. That set a precedent, which is likely to be mirrored in these EU rules, making losses for large uninsured savers a permanent feature of future banking crises.




ECB President Mario Draghi recently cautioned that Cyprus's bailout was "no template", in a bid to ease market fears that bank deposits would in future be fair game for international lenders supporting struggling euro zone countries.


In a document prepared by government officials in Ireland, which as holder of the rotating EU presidency will chair the ministers' gathering, they write that interbank deposits of less than one month should also be penalized.




Customer bank deposits of up to 100,000 euros would remain protected under an existing EU law and the latest proposals touch on sums above this threshold.


"While it is acknowledged that bailing in interbank liabilities may carry certain risks," officials write in the document, seen by Reuters, "on balance, it is preferable ... that these liabilities are not excluded from bail-in".


Such a suggestion will dismay many officials, who witnessed a freeze in interbank lending that the European Central Bank is still struggling to unblock despite having provided more than one trillion euros of cheap funds.




Although some policymakers have sought to portray Cyprus and the losses suffered by depositors at two of its banks as a one-off, many experts believe it marks a dramatic change in tack in how Europe deals with troubled banks, to spare taxpayers who have been on the hook for previous bailouts.



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somecallmetimmah's picture

So, knowing what we know now, benefiting from a preview of what is going to happen in the U.S. a few short weeks/months/years from now, what actions should you take now to protect yourself from these shenanigans?

BigJim's picture

Buy bitcoins, obviously!

Hadn't you heard? There's a 40+% sale on!

idea_hamster's picture

Interbank lending, prepare to get "Han Solo-ed" in Carbonite.

I guess we'll have to wait for the sequel to the EU for it to get unfrozen....

(BTW, any chance of getting that $250k/Eu100 deposit insurance limit indexed to inflation?!)

NotApplicable's picture

Stupid squared? A snake eating its own tail? Or both?

In other news, does this mark the demise of the money-market?

Buck Johnson's picture

Your correct, they are canabalizing themselves in order to stay healthy and  it won't work. 

smlbizman's picture

i still think some are more pari passu than others....

Missiondweller's picture

And people thought the banking system seized up quickly in 2008!

What happens when you think your bank counterparty may be in trouble and your overnight loan might turn into a bail-in?

This will create a contraction in shadowbanking, which would be fine, except that it drains liquidity.

Sudden Debt's picture


I played it smart!!!

moved some money to my Belfius account (dexia)
Bnp, Bankia, KBC, ING, Rabobank, Santander...

I'll be fine...

Panafrican Funktron Robot's picture

"We are about to intentionally start a liquidity crisis, as a means to further consolidate power.  Buckle up, bitchez!"

-Super Mario

Urban Redneck's picture

The question is whether he would have the gall to plead ignorance when he and his family have piano wire around their necks...

No "banker" can be that stupid.  (The bar is really that low on that issue...)

q99x2's picture

You can't buy them. I tried. All broken.

MeelionDollerBogus's picture


When /sarc by itself just isn’t funny enough :D

insanelysane's picture

Register all of your gold with government agencies?

Winston Churchill's picture

Guns first , wouldn't want the sheeples armed when we gang rape them.

Its all for the children don't you know, so we will make them watch before we

do them.

Signed Jamie and Loyd.

Winston Churchill's picture

Not at all. Not at all religous, but I know evil exists.

Recognise those two as its personification after having dealing

with Robert Maxwell years ago. Those   are the same as  him.

Pure Evil's picture

Where!?   Where!?

(looking around)......I don't see any.


(Ok, don't ask me to look in a mirror).

Ahmeexnal's picture

If this doesn't trigger a bank run, nothing will.

rubearish10's picture

Maybe nothing will but in '08 when a hint Money Markets could "break the buck" and cash equivalants would be frozen, things got pretty scary, remember? The Lehman case comes front and center but with subtle nuances that many apparently do not recognize. It will come down to TRUST!

NotApplicable's picture

Scary? Didn't Benron fix all that in like... 15 minutes?

rubearish10's picture

Yes, in '09 but not before a foiled Congressional vote and a banking crisis. The Bernank knows even 15 mins is too much time (collapse and permanent distrust for the 'system')so he'll just leave the PUT in place. So, you're comment is about right. It just demonstartes how screwed up freakin everything is and hard it is to believe what we're seeing.  

NotApplicable's picture

Nah, he didn't fix nothin'.

Sorry 'bout dropping my /sarc tag.

rubearish10's picture

That fucker exiled us all to serfdom. 

Ghordius's picture

Is this a... promise I can hold you against? ;-)

Sudden Debt's picture

People don't run anymore... they only move by car anymore...

swissaustrian's picture

It will totally freeze interbank lending and drive every bank into the arms of the ECB.

McMolotov's picture

My advice would be to get your money (and anything in safe deposit boxes) out of the bank. Only put cash in there when it's absolutely necessary, like for paying bills or having automatic withdrawals for insurance, etc. Keep some cash on hand, but also stock up on stuff you know you need and can store and stuff you don't necessarily need but could use for barter.

Many people will tell you to buy gold or silver, but IMO that should come after you've bought "supplies." As the fiasco in the Balkans showed, canned food will be extremely valuable — moreso than precious metals — if the shit really hits the fan..

Winston Churchill's picture

I agree. Six months of food and water first,then lead and PM's

Mums the word.

I'm trying to get out of the matrix.Personally I am, but my

 business, not so easy.Most payments out are ACH , and half in ACH/  credit cards.

debtor of last resort's picture

Exactly. It's rather sad to buy necessary stuff like bread with your silver. Small bottles whiskey, canned bread and a ceramic water filter. To become a real prepper is unpossible. Too much uncertainties.

macholatte's picture



Be extremely subtle, even to the point of formlessness. Be extremely mysterious, even to the point of soundlessness. Thereby you can be the director of the opponent's fate.

Sun Tzu

Supreme excellence consists in breaking the enemy's resistance without fighting.

Sun Tzu

From each according to his abilities, to each according to his needs.

Karl Marx

somecallmetimmah's picture

So if I understand correctly, I should:

1) apply for every credit card offer I can find,

2) max them all out,

3) buy gold & silver bullion

4) bury it somewhere, &

5) declare bankruptcy?


DutchR's picture

6) lay low in a (cheap) country of choice to weather the (shit) storm

ps. somewhere between 1 and 2 it helps if you go invisible ;)

hardcleareye's picture

That all depends on what kind of ethics you have......  If I were to do that I would think of myself a thief....

Integrity - adherence to moral and ethical principles

RafterManFMJ's picture


Doctor of Reality's picture

For a dwindling few... 2 wrongs don't make a right. EVER.

RafterManFMJ's picture

Name them for the collaborators and enemies they are then; they've accepted their programming. 

"To deal morally with an immoral enemy is in itself immoral."

Ghordius's picture

7) whatever it is, plan for 7 years of the same shit - even if you don't believe it possible. This is serious advice

Sudden Debt's picture

and make sure you buy some camping gear... a tent and stuff...
debt will follow you forecer buddy.
Get rid of it. the collapse isn't arround the corner just yet. 3 to 5 years.

On the other hand it could happen next month :)

chdwlch1's picture

I'm sure the Central Bankers/Govts would like depositors to immediately transfer any uninsured deposits to the "safety" of the TBTF banks.  With their over-leveraged derivatives exposure and (probable) Cyprus induced withdrawals, they might need the extra $$ to juice their capital ratios...

Banksters's picture

Legislate it and you have legal theft.

Fuckers have been doing this since the start of time. Ceaser claims your wife.  Now Ceaser wants to fuck your wife while you watch.   

Bad laws are the worst form of tyranny. Edmund Burke

hardcleareye's picture

Ceaser is getting a little kinky these days.....

Ghordius's picture

Actually it's called... taxation

Anyway, "That set a precedent, which is likely to be mirrored in these EU rule"

1. precedents are less relevant in Civil Law legal systems

2. having said that... I'm curious, it's quite unclear, yet

Clayton Bigsby's picture

Christ, are they actually trying to precipitate a bank run???

e-recep's picture

think this way : who will benefit from a massive bank run?

Tango in the Blight's picture

Bitcoin won't explode once bank accounts are threatened with seizure. Long bank stawks!

Cognitive Dissonance's picture

Fatigue cracks are beginning to appear in the facade.

<Only a matter of time now.>

rubearish10's picture

Really? Then the .0035% correction, hey? WTF? Sorry but there's been quite a few cracked facades displayed right here on ZH  (See all charts). Waiting is a tough task.