Potential For Bank Runs Has Europe Preparing For The Worst
| 06:13:00 |
The European Central Bank is imploring European leaders to make a choice as to their nations' commitment to the euro, reports Reuters. A clear direction and greater defense against bank runs are perhaps the only things that will keep the European Union from dropping into an economic chasm - and pulling the rest of the globe down with it.
A couple of banking system worries
A ton of European speculators are putting money into Austrian and French bonds that are at a low mark for 10-year yields. The euro has deflated in value against the U.S. dollar with a two year low at this point because everyone is worried. There is a lot of concern that Greece will not survive and that Spain will have a failing banking system.
The AP explained that Spanish banks moved a lot of cash in March faster than it has ever been seen since record keeping started in 1990. The fourth-largest bank, Bankia, lost a lot because of a real estate crash, which caused it to be nationalized. Spanish banks have lost $82 billion in recent months in capital.
Plan for bailout not confirmed
In order to keep the European economy from getting even worse, there were rumors that there can be a Spanish bank bailout from International Monetary Fund. This was denied by International Monetary Funding Managing Director Christine Lagarde.
"There is no such plan. We have not received any request to that effect and we are not doing any work in relation to any financial support," said Lagarde.
At the same time, there is a June 17 Greek general election that will determine the nation's future on the subject of the euro zone. The SYRIZA leftists are not winning right now; the New Democracy party is winning, and that party is for bank bailouts. Ireland voters want the European Union to help out a bit, according to the New York Times, which is why it wants the government to approve a referendum.
Check out clarity
According to Mario Draghi, European Central Bank President, nations have to be put in order with the Euro quickly by European leaders. Not everybody in the euro zone will get help and economic policy from the ECB.
"We will avoid bank runs from solvent banks. Depositors' money will be protected if we build this European guaranteed deposit fund. This will assure that depositors will be protected," said Draghi.
While the ECB is pushing for a joint deposit guarantee for depositors, Germany is not sold. As the paymaster of the European Union, Germany has been unwilling to risk more of its own taxpayers' money to prop up the union. German Chancellor Angela Merkel said Europe should consider all options.
"There are integration steps which will require treaty changes. We are not at that stage today but nevertheless there are no taboos," she said at a news conference.
Financers concerned
The European financial crisis has brought on financiers to be really concerned at this time, according to Draghi. Unfortunately, that must not translate into caution.
"I urge all governments to keep this in mind, because it is better to err by too much in the very beginning rather than by too little," he said, citing the recent failures of Spain's Bankia and the French-Belgian bank Dexia.
A couple of banking system worries
A ton of European speculators are putting money into Austrian and French bonds that are at a low mark for 10-year yields. The euro has deflated in value against the U.S. dollar with a two year low at this point because everyone is worried. There is a lot of concern that Greece will not survive and that Spain will have a failing banking system.
The AP explained that Spanish banks moved a lot of cash in March faster than it has ever been seen since record keeping started in 1990. The fourth-largest bank, Bankia, lost a lot because of a real estate crash, which caused it to be nationalized. Spanish banks have lost $82 billion in recent months in capital.
Plan for bailout not confirmed
In order to keep the European economy from getting even worse, there were rumors that there can be a Spanish bank bailout from International Monetary Fund. This was denied by International Monetary Funding Managing Director Christine Lagarde.
"There is no such plan. We have not received any request to that effect and we are not doing any work in relation to any financial support," said Lagarde.
At the same time, there is a June 17 Greek general election that will determine the nation's future on the subject of the euro zone. The SYRIZA leftists are not winning right now; the New Democracy party is winning, and that party is for bank bailouts. Ireland voters want the European Union to help out a bit, according to the New York Times, which is why it wants the government to approve a referendum.
Check out clarity
According to Mario Draghi, European Central Bank President, nations have to be put in order with the Euro quickly by European leaders. Not everybody in the euro zone will get help and economic policy from the ECB.
"We will avoid bank runs from solvent banks. Depositors' money will be protected if we build this European guaranteed deposit fund. This will assure that depositors will be protected," said Draghi.
While the ECB is pushing for a joint deposit guarantee for depositors, Germany is not sold. As the paymaster of the European Union, Germany has been unwilling to risk more of its own taxpayers' money to prop up the union. German Chancellor Angela Merkel said Europe should consider all options.
"There are integration steps which will require treaty changes. We are not at that stage today but nevertheless there are no taboos," she said at a news conference.
Financers concerned
The European financial crisis has brought on financiers to be really concerned at this time, according to Draghi. Unfortunately, that must not translate into caution.
"I urge all governments to keep this in mind, because it is better to err by too much in the very beginning rather than by too little," he said, citing the recent failures of Spain's Bankia and the French-Belgian bank Dexia.
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