It's Your Money But You Can’t Have It: EU Proposes Account Freezes To Halt Bank Runs

Tyler Durden's picture

Authored by Mike Shedlock via MishTalk.com,

If there is a run on the bank, any bank in the EU, you better be among the first to get your money out.

Although it’s your money, the EU wants to Freeze Accounts to Prevent Runs at Failing Banks.

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.

 

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.

 

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.

 

Under the plan discussed by EU states, pay-outs could be suspended for five working days and the block could be extended to a maximum of 20 days in exceptional circumstances, the Estonian document said.

Spooking Customers

I side with Charlie Bannister of the Association for Financial Markets in Europe (AFME), who says “We strongly believe that this would incentivize depositors to run from a bank at an early stage.”

Why Might Customers Want to Run?

Here are a trillion reasons: Over €1 Trillion Nonperforming EU Loans: EU vs US Percentages.

Non-Performing Loans

Notes

  • I am unsure why the graphs sometimes use different country codes than appears in the first column. Where different, I show both symbols. The list of country codes is shown below.
  • Forb ratio stands for forbearance ratio.
  • Cov ratio stands for coverage ratio: (Loans – Reserve balance)/Total amount of non-performing loans. It’s a measure of how prepared a bank is for losses.

Italy, Greece, Spain, Portugal, and Ireland have a combined €606 billion in non-performing loans.

The entire European banking system is over-leveraged, under-capitalized, and propped up by QE from the ECB. Simply put, the EU banking system is insolvent.

That the EU has to consider such drastic measures proves the point.

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Buckaroo Banzai's picture

How is this surprising? Obviously they are going to seize your money if they think their interests are threatened. What else would you expect them to do?

Truther's picture

ummmm.. Run like hell maybe?

tmosley's picture

<---this will drive people to gold for everyday purposes

<---this will drive people to crypto for everyday purposes

 

What's in your wallet?

Manthong's picture

 

“It's Your Money But “

No, it’s not… it’s theirs until or if they pay back the loan you extended to them.

They have turned bank deposits into a “risk on” play.

The little 5 lb. 9 oz bag of 1000 pre-1965 dimes I keep as a paperweight on my desk is real money that is out of the system and is “risk-off”.

Stuck on Zero's picture

And, of course, the EU would also declare a holiday on bitcoin transactions by blocking access to all the exchanges.

3LockBox's picture

Perhaps not. Cashless control. My firm belief is that they are the puppet masters of the cryptos.

Of course they act like they are against it but it is all to corral the sheep.

Which would be easier to track, control, tax and steal?

Crypto or real physical money?

Just saw a piece where this guy was opening up good ole <s> JSnips ether wallet and putting together deposits along with the days he was out pumping up crypto gadgets and ICOs.

This whole crypto thing is so freaking slimey. It is going to end badly for the Crypto Alcolytes following the sirens of the sea.

SumTing Wong's picture

This is going to cause the bank run in the first place.

I'd be taking my daily limit out at the ATM, cashing every check, paying for everything with electronic fiat until I had cash (and lots of that traded for arable farmland, tractors and building materials, gas and oil, solar panels, foodstuffs, precious metals, anything tangible and useful). Wait, that's what I have done here in the US.

TwelveOhOne's picture

Yes, exactly.  Just like, the moment BTC-e opens back up, I and many others will withdraw our funds, never to return.

Hopefully, that's not the state they're now in!

Manthong's picture

 

If it is not in your hands, mattress, basement, rafters, hole in the yard or known landmark vectored (don’t depend on GPS) spot on the bottom of the lake or in the woods, it is not yours.

..and oh, fiat (look up the meaning of fiat) FRN’s belong to the FRB bank and only have meaning or value according to their whim (think "prime" rate).

Although they are a representation of your toil and sweat, they are just that… a facsimile.

Until you convert your ethereal digits and their paper (pseudo) tokens to hard assets, they remain a figment.

Crypto is the same except not very well regulated (yet) and not centralized.

Crypto is property of the Internet and can only have durability as long as electricity and comms are available.

 

And oh… real estate belongs to the state.

You are a fractional owner as long as the state has taxing authority on your property.

It's kind of hard to hide your house in a hole in the ground or on the bottom of the lake.

 

True Blue's picture

It's kind of hard to hide your house in a hole in the ground or on the bottom of the lake.

 Growth industry? It'll give a whole new meaning to FROG in RE circles...

armada's picture

Jewish Bankers: It's Your Money But You Can’t Have It

Jewish Zionists: It's Your Land, But We Stole It Fair And Square http://wp.me/p4OZ4v-r

stizazz's picture

Western banking is built on a faulty foundation: paper (fiat) money backed by nothing.

Manthong's picture

 

um.. sad to say.....

it's backed by guns and a bunch of your neighbors who do not have a clue about what the Constitution is all about but they have a stake in the status quo…

So you are pretty much F’d until some grand enlightenment.

SoDamnMad's picture

What's with this referring to some "bible" shit about who was given what and chosen how by some "god".  Not sure any Chinese, Indonesians, Australian aboriginals , Sioux or were consulted when this decision was made in some book.

SoilMyselfRotten's picture

Not to burst yer bubble 1202 but BTC-e is very unlikely to open again(so say several respected crypto guys)

Frank Underwood's picture

Well said. Always like reading your posts. If you can't physically hide it. It's not yours.

Xredsx's picture

Brexit Britain are storing alot of gold.

shovelhead's picture

Put you money in Pokemon cards.

It will emerge as the new cash.

RedDwarf's picture

"Crypto is the same except not very well regulated (yet) and not centralized."

No, crypto has value based upon voluntary choice of people in the free market, not due to fiat.  Comparing th two is retarded.  It's like conflating rape and sex, or theft and charity, or even Marxism and Capitalism.  Fiat and free market cryptos are in fact the opposite of each other.

"Crypto is property of the Internet and can only have durability as long as electricity and comms are available."

The internet was designed to survive nuclear war.  The whole point is it's decentralized durability.  If enough happens to truly bring down all entire power grid and the majority of computers and electronics, then you are talking massive large scale EMP.

In that scenario gold and silver are also worthless.  Vehicles are toast.  No food deliveries, mass starvation.  Only 3% of the population now are farmers, and most of them rely on vehicles.  Are you Amish?  If not then you are not prepared.  There are only 3 days of reserve food in the stores.  Post EMP is a zombie apocolype scenario, which really is just a metaphor for most people starving.

toady's picture

I think they were testing some of this last weekend.... all the sudden my atm and credit card didn't work for about 48 hours (Friday & Saturday) the call center was closed by the time I called on Friday, and all day Saturday. It was very bad timing as I was traveling... Good thing I'm an ex-boy scout and adhered to the "be prepared" motto....

Ol Man's picture

Once a scout, always a scout...

8>D

SoDamnMad's picture

Paypal is doing that more and more lately.

nidaar's picture

zactly, it's as simple as pushing a button for the ones controlling the gateways of the internet. Those who believe virtual-currencies are safe are delusional. I know because I work in the sector.

anarcode's picture

Fine, we'll just send crypto direcly to each other as designed. Converting back and forth to fiat was just a stepping stone.

Bunga Bunga's picture

Please learn how Bitcoin works. You don't need exchanges to do Bitcoin transactions. If bank accounts are blocked why would anyone exchange Bitcoin for fiat? In that case more merchants will just start accepting Bitcoin.

seataka's picture

 

"Bitcoin's power usage is on the order of the entire power consumption of Ireland" "Even if bitcoin could replace conventional currencies it would be an ecological disaster"


Want to understand Bitcoin, Etherium & blockchains? READ THIS GUY'S BOOK I've known him for 25 years, you will not do better... I trust him and his judgement. Another of the real old guard of the alt.scientology.war Arnie Lerma.

 

Manthong's picture

 

bankers.. the root cause

buzzkillb's picture

And that day by chance someone releases the mother of all ransomware with payment in guess what. By chance of course.

seataka's picture

"Bitcoin's power usage is on the order of the entire power consumption of Ireland" "Even if bitcoin could replace conventional currencies it would be an ecological disaster"


Want to understand Bitcoin, Etherium & blockchains? READ THIS GUY'S BOOK I've known him for 25 years, you will not do better... I trust him and his judgement. Another of the real old guard of the alt.scientology.war Arnie Lerma.

logicalman's picture

If it's in a bank, it belongs to the bank.

 

StarGate's picture

And if you read the fine print on "FDIC insured" you will discover that the promise is not that your money will be returned, but that MAY BE we will give it back.

Reserve (as in all the Fed Reserve system Banks - which is nearly all) means only 5% to 10% "reserve money" is actually available at your bank. So only the first 10% who demand to get "their" money have any chance of ever seeing it again.

MoreFreedom's picture

Yea, but that bag is only worth maybe $1400.  It won't last long.  I'm glad you have it - people will need a means of exchange when paper dollars aren't wanted.

Dizzy Malscience's picture

If that time comes; old, real silver coinage will be worth its weight in gold.

 

Manthong's picture

“that bag is only worth maybe $1400”.

..you have the concept..

That particular bag cost me $1236.00 pretty recently.

..but I have many tubes and sleeves and green boxes of other stuff that leads me to believe I will always be able to get gas and groceries in the event of hard times.

..and if it does not come easy, I have stuff that will, assist me to persuade and obtain or extricate what I require.

PM’s, in my opinion are not speculation… they are insurance (as well as is ammo).

Like I have always said… “If you can move all of your PM’s, ammo and firearms on a single pallet.. you do not have enough".

:-)

 

DanDaley's picture
A man can never have too much red wine, too many books, or too much ammunition. -Rudyard Kipling
Dugald's picture

 

A 5lb.9oz paper weight......

What, you can't afford doors or windows........!

Manthong's picture

 

I do not understand...

Back in the day of natural ventilation, high ceilings, and transom window/doors one needed paper weights to keep papers from flying off the desks and other office/ library furniture…  

I have a scientifically balanced central heating and air conditioning system. I calculated the 2.5 ton requirement myself, but I am into the benefit of human evaporative (sweat and other emotive) dynamics, air movement and I have a lot of fans.

So I like paperweights.

 

...

When the children come over I have to lock up the paperweights that have 9 mm, .40 and .45 characteristics.

My joint is filthy with them.

The missus is not really gun saavy, so I make sure she can alway grab the simple  .357 magnum revolver in the kithen cupboard.

Most everywhere else, for my emergency use there are an assortment of auto's.

But for those of you who fret… you cannot make a move around my digs without being recorded on one of three terabyte drive  DVR’s.

 

Ollie North did not have what I have.

 

Honest to God,,, a Glock .40 under the bed with a tac light in a practiced falling grab... allowing  gravity to assist me to sieze the piece and come up dangerous  in the event of an invasion,

 

The internal guide rod laser is fluff.

 

Consider that scenario... I have, many times

 

Oh, and for the info of the techies I have already upgraded two of the DVR's to SSD.

I blame my curent perspective on the movie industry, Kevin Bacon, the captivating Reba and disgusting democrats who are like schumer and pelozi ground boring monster slugs ...

https://youtu.be/qFNBUs7O-h4

 

Oh.. and just for you youngsters,, housekeeping tip…

Make sure that the little .380 auto or 9mm you keep in the bathroom gets a good bore brushing, cleaned and oiled at least once a month…….   The humidity plays hell on the steel.

 

edit..

somebody out there lives in a one room hovel with a hot plate and needs to go downstairs for a cool drink.

 

and oh.. oh to the smart ass with the red vote ...

maybe I willl leave the loaded guns out for the klds..

 

.maybe they will play with your kids, too. 

 

Demon Slayer's picture

We'll pay our "unsecured creditors" if there is anything left over after we pay off our trillions in derivative bets.

3LockBox's picture

<---this will drive people to Gold AND Silver for everyday purposes.

or at the least to store your wealth.

TheGardener's picture

Average everyday people might never be driven to anything.

And your choices about are about as stupid as it gets :

everyday purchase will always be in whatever topical yet externally elusive currency.

 

Gold and crypto will never have to to do with everyday purchases but you master troll have them up-and down voters by their balls as it seems.

 

 

 

Manthong's picture

 

“Gold and crypto will never have to to do with everyday purchases” 

Depending upon how much we allow the totalitarians to control our existence, one might have to exchange to the “coin of the realm” through a legitimate or illegitimate intermediary, but….

Let reality sink in for a minute there…

Although horridly “price” manipulated in the synthetic market by bankers and their government shills (listening, Bart Chilton?), two of those dimes have a real trade value of about $2.50 in Yellen’s depreciated fiat “dollars”.

That will buy a gallon of gasoline or a gallon of milk or a dozen eggs or two loaves of bread or half a cut up chicken…..

The same as those two dimes would in 1964.

And in 2020, no matter what happens to the FRB USD o-F-me, they will still buy the same amount of real stuff.

 

That, my friends, is real insurance and the epitome of the concept "store of value".

 

I will say once again.. I have nothing against crypto and I would embrace it if I trusted those who control government, electricity and the Internet.

I do not.

 

 

 

SoDamnMad's picture

I passed a refinery while on vacation and I was wondering if the tractor trailer drivers who are loading their trucks for a multi-hour trip to far off gas stations will be  paying for that 30,000 lb load with bags of dollars, bags of gold or silver coins or bags of bitcoins when SHIF.