Put it all under the mattress? - (a) you've got to get it out of the bank first
(b) i my case a pillow would be big enough and
(c) It is not a good idea to give Hollande ideas!
my response appeared in the wrong place
Its counter-intuitive, but the larger the bank the greater the systemic risks. With fewer banks, their investment risk models are easily manipulated to allow greater risk for greater returns to draw in more deposits to continue to play the game. Its exciting for the players. (Bakers forgot Argentine loans when they lent to Greece). When more and smaller retail banks were around, paying boring interest, the multiplicity of banks had a self-regulatory impact on the risks all were willing to take on. Banking must to return to being boring or we need more frightened bankers. Roll tha god damn guillotines already. Keep a close eye on what happens next because if the only remaining "good" Cypriot bank is shuttered, then the entire European bailout package, cobbled in
the last hours of Sunday, goes poof.
@Christopher
From the OP:
“Banks are not vaults. They are thinly capitalised asset managers that make a promise– to return depositors’ money on demand and at par– that cannot always be kept without the assistance of a solvent state.”
Breaking the banks up in to smaller pieces only raises the risk, surely.
It is very possible that part of a deposit would be confiscated, it will be labeled a tax or fee. Until the banks themselves are broken into small pieces the risk remains real.
I received a telephone call this morning from CIC, to know would I be interested in opening an account with them (think they found me via AE listings). I'm going to meet with this man next week here at the house, and see what CIC have to offer. I'm currently with Credit Agricole, so might as well find out what other options there are. Anyone know anything about CIC? Would they be a safer option than CA as some posts here seem to suggest that CA is somewhat vulnerable? Thanks.
I am worried as my bank credit agricole have had various downgrades / profit warnings etc due to high exposure to greek debt ! so will be changing banks soon.
I have found them to be pretty useless anyway.
i totally disagree , when i first moved here in 2003 there were various strikes / blockades on the roads to do with prices being squeezed by supermarkets etc , ports were blocked by lorries for some other reason and a militant attitude prevailed.
despite constant cost of living rises / job losses / financial crisis / change of Govt making things worse where has the militancy gone ?
But dick, don’t be too complacent.
If you have a property in France which you sell for 100k€ or more to either repatriate funds to the UK or buy another property and that just happens to coincide with a Cyprus type problem here, your funds will be subject to the same sequestration!
Never say never…
In the unlikely event that my wife or I ever have €100,000 in the bank I will begin to worry.
Yes Bryan, you are quite correct.
There was an image in Cyprus of someone with a dumper truck posed for the camera on the street outside his bank close to the ATM
The picture in France would have been so different; a hole in the wall where the ATM once was…
I very much doubt it would happen here. If it did I think the whole country would go into a violent revolt, the French are very good at standing up for themselves
You can worry about too much. They are probably going to roger you in one way or the other anyway. My income comes from the UK so I just keep the minimum here. Certainly I would advise against any "black" schemes as they tend to catch up with you eventually. Long term precious metals, works of art, property are always more interesting than cash. As for banks bring back Mr Mainwaring. Not sure if I know anybody anymore with >100k cash in whatever currency but I have seen some expensive looking four wheeled evidence in the streets of Paris 9-3 and sarf London SW2 about which the respective plods do precious little.
In a way it has been a welcome awakening, again, for people to realise that savings in a bank is actually a risky investment in the well-being and success of that particular bank. Iceland had almost been forgotten.
“Banks are not vaults. They are thinly capitalised asset managers that make a promise– to return depositors’ money on demand and at par– that cannot always be kept without the assistance of a solvent state.”
Nothing wrong in Cyprus welcoming investors and savings, it was where the cypriot banks then invested this money: Greek government bonds. The interest rates on these were attractively high, so high that a prudent banker should have realised that there is risk associated and not put all eggs in one basket. But a country cannot default, they thought.
Now comes capital controls, to prevent bank runs and further collapse of the economy. But that has other dimensions. Friedrich Hayek wrote in his 1944 classic, The Road to Serfdom:
The extent of the control over all life that economic control confers is nowhere better illustrated than in the field of foreign exchanges. Nothing would at first seem to affect private life less than a state control of the dealings in foreign exchange, and most people will regard its introduction with complete indifference. Yet the experience of most Continental countries has taught thoughtful people to regard this step as the decisive advance on the path to totalitarianism and the suppression of individual liberty. It is, in fact, the complete delivery of the individual to the tyranny of the state, the final suppression of all means of escape—not merely for the rich but for everybody.
Where next? Look at the chart below, Loan-to-Deposit ratios in European banks. With a LTD ratio of close to 200% like in the Nordics, even the tiniest deposit outflow results in a liquidity problems.
Graham Lees felt he was being a tad cynical but I think he's correct.
French beaurocracy is such that they wish impose taxes rigidly and the people themselves are conditioned to be suspicious of cash transactions (black economy) and some will even report it.
I've been told by a French person that if a successful fine is imposed on someone who evades taxes by trading with cash the 'informer' recieves a small commission. Maybe someone else more knowledgable of such things could verify whether it's fact or hearsay.
John, it's rich savers like you who ruin things for the rest of us!
http://www.telegraph.co.uk/finance/financialcrisis/9952979/Cyprus-bail-out-savers-will-be-raided-to-save-euro-in-future-crises-says-eurozone-chief.html
I have shared this link for your info. Just because the Telegraph says it, doesn’t make it so, but does not make the best of reading either. Larger economies would have much more bargaining power than Cyprus one would imagine. However, the black economies of some countries are now showing their consequences. I heard an economist in a presentation say that, in Greece, the black economy was 51% of GDP, and this was roughly equivalent to the first Greek bailout amount in monetary terms. In other words, if the tax had been collected, then maybe the funds would have been there. Hardly surprising therefore that tax evasion is high on the hit list for a government, but it would take a long time to change a seemingly cultural pastime! Seems Cyprus has shown a much quicker solution to raise money when the proverbial hits the fan. So in my view, we can only control what we can control so encourage young people to pay up where tax is due and look after their country, maintain legitimate tax efficient structures for your money, and diversify. After that, keep trying to enjoy life.
But economically very close to the mark nonetheless Rob.
Naturally keep an eye. We are in a strange phase of development. Friedrich Hayek's economic theories are proving far sounder than the Keynesian versions that bob about in the ocean of speculation. What has now happened in the case of Cyprus, their bail out particularly, is illustration of the resilience of the Eurozon and how solidarity within it can keep the Euro afloat. It is also a hint that standardising banking and fiscality that is much talked about but has been 'on ice' since Merkel got cold feet, should now go ahead. It would radically change banking and tax structures here, mainly to everybody's advantage although the people with a lot of money are nervy about the restrictions that would be imposed on them for their offshore banking habits. The Russian 40% of all money invested in Cyprus example should serve as a warning. Cyprus is not the only tax haven that is fragile, forget the fact that banks hide away in these places and realise that some of them are actually not that well off and their governments may well do the same thing one day. Without the Euro to back them up though. What Ayrault is proposing is more to do with avoiding taxes by making cash payments whereby he cannot impose a limit of a €1k withdrawal which, for instance, would not work for anybody with several accounts or taking out their cash for a month's shopping and so on. So this is an attempt to rein in some tax evasion. Also, as you say, it is about criminal transactions, about which we could all say quite cynically that like everything else ever tried is doomed to failure. Mind you, that is effectively how they got Al Capone in the USA in the end...
I think there is a bigger picture here. When the German finance minister comes out and says'This is the model for bailouts in the future' we should sit up and take notice. Cyprus is a minnow in EU terms, but a great testing ground.
Never liked French banks anyway. Not exactly a scientific analysis from a financial adviser, more a personal view!