Who has 85k in the bank? Guarantee system abolition proposed in EU plans.

[ebull]

Story as I understand it:

The EU are making plans to adjust the 2016 bank bail-in system.

They have asked the ECB for advice who have suggested replacing the 85k guarantee on bank deposits with " access to an appropriate amount of their covered deposits to cover the cost of living within five working days of a request " [zerohedge link below]

I am guessing it now goes back to the EU who make a next version of the plan and vote on a new system / rules changes.

Anyone have answers?

Will it be discussed / voted on by EU leaders? I don't know.

When  will MSM tell us about it? I don't know.

Will it apply to UK? Fairly sure yes.

Why hasn't Carney been asked for comment as well? Brexit?

Will we be doing this too post Brexit? THEY don't know.

 

This is about EU action [ie will apply to non-eurozone] rather than ECB specific so think it deserves a seperate thread. Was stolen from

http://www.housepricecrash.co.uk/forum/index.php?/topic/190224-the-big-fat-ecb-cockup-thread/&page=32

13 hours ago, ebull said:

 

interestrateripoff:

 

http://www.zerohedge.com/news/2017-11-19/ecb-proposes-end-deposit-protection:

ECB contemplating ending deposit insurance but you'll be able to get access to enough money to cover living expenses... bailins all round to cover banker losses but don't expect to share in the profits for the risk.

=========

ebull:

The article says it goes beyone contemplating.

It doesn't make clear that the side by side compared texts on zerohedge are what the EU proposed on the left [leaving deposit protection in place] and what the ECB has recommended [removing it]. The enormous pdf from the ECB sure does a good job of hiding this little fact.

I find it hard to believe that euro leaders will be dumb enough to remove deposit protection. Surely once MSM get hold of that idea and it looks serious / gets explained, there will be bank runs and financial meltdown.

Am I correct in saying this means UK as well [at least until brexit]?

What are the rules for NSandI if the whole lot collapses and most every bank is grabbing their bail-in swag [including the last 100k now deposits are not protected]?

This deserves a bit more attention here than this sleepy backwater thread.

 

 

Edited November 20, 2017 by ebull

[Errol]

Nothing in NS&I will be safe. That much is obvious (just read the Terms & Conditions).

[ebull]

Sorry, by "safe" I meant excluded from bail in rules [a specific risk of what-i-call-theft]

Could you be kind enough to point me at the bits of t+c.s I should read?

I guess the risk is different to for example a eurozone bank owned by the government of that country who could potentially have the bail-in rules applied because they're just a bank. Locals talk about deposits at that bank being safe as gov bonds. Except they're not are they? Tricky?

 

Maybe some of my answers on EU meetings are here .... meeting 29 Nov .... forexfactory website gives :

European Council (latest release)
FF Notes	ECOFIN meetings are usually held in Brussels and attended by Finance Ministers from EU member states. They discuss a range of financial issues, such as euro support mechanisms and government finances. The meetings are closed to the press but officials usually talk with reporters throughout the day, and a formal statement covering meeting objectives may be released after the meetings have concluded;
Why Traders Care	ECOFIN is the Eurozone's broadest financial decision making body. The council coordinates economic policies of the 28 member states, and their initiatives and decisions can have a widespread effect on the Eurozone's economic health;
Acro Expand	The Economic and Financial Affairs Council (ECOFIN);

 

But this says its now 5th Dec. Wonder why it changed?
www.consilium.europa.eu/en/meetings/ecofin/2017/12/05/

[and gives no agenda or other info ... nice transparent EU. I gave feedback.].

 

[crashbaby]

Won't this backfire? More money would move from bank accounts into gold/stocks&shares/other assets, leaving less in the bank.

[papag]

What a really vile organisation the EU is and still we have people wanting to be a part of it 

[Errol]

6 minutes ago, ebull said:

Could you be kind enough to point me at the bits of t+c.s I should read?

The main bit for NS&I/Premium bonds is the part where the Treasury reserves the right to amend any and or all terms and conditions for any reason and at any time.

This would naturally be used to suspend redemption, change values, or pretty much anything else you can dream up.

Edited November 20, 2017 by Errol

[Fromage Frais]

"access to an appropriate amount of their covered deposits to cover the cost of living within five working days of a request"

 

Thats really a crap idea replace a nice simple x protected over this is not scenario with..... hmm err we think you need  this.

What if I have a harem of expensive mistresses and I need 10k a week to cover my cost of living?  Who is going to decide what an appropriate amount to cover my cost of living is?

Better to say nothing is protected

 

 

 

 

[houseface2000]

26 minutes ago, Errol said:

The main bit for NS&I/Premium bonds is the part where the Treasury reserves the right to amend any and or all terms and conditions for any reason and at any time.

This would naturally be used to suspend redemption, change values, or pretty much anything else you can dream up.

https://www.nsandi.com/files/published_files/asset/pdf/premium-bonds-brochure.pdf

[goldbug9999]

30 minutes ago, crashbaby said:

Won't this backfire? More money would move from bank accounts into gold/stocks&shares/...

Bitcoin

[The Spaniard]

2 hours ago, crashbaby said:

Won't this backfire? More money would move from bank accounts into gold/stocks&shares/other assets, leaving less in the bank.

Money moves from one bank account (gold buyer) to another (gold seller).

In general, aggregate electronic bank account money decreases only when bank debt is repaid or when physical cash is withdrawn.

[Up the spout]

2 hours ago, crashbaby said:

Won't this backfire? More money would move from bank accounts into gold/stocks&shares/other assets, leaving less in the bank.

Oh hell yeah, it's the reason the Chinese and Indians are such big buyers of gold - no trust in their banking systems.

[RockySpears.]

2 hours ago, crashbaby said:

Won't this backfire? More money would move from bank accounts into gold/stocks&shares/other assets, leaving less in the bank.

  Sadly no. How many people do you talk to that say "it would never happen" or "they wouldn't do it"?  

Let's not forget those that pay absolutely no attention to finance news, let alone understand the implications.

  Remember Cyprus?  over a million people had no access to most of their money, what happened, nothing.

The Banks do as they please, the best we can do is protect our own and keep quiet about it, lest they come for our barbarous relics,

Yours,

RS

[Assume The Opposite]

I don't think most people know that a deposit is a loan to the bank, and you have no legal right to that money once it's deposited. Your account is an 'account' of what they owe you. 

Who said that? The Bank of England!

"Depositors who deposit their money with a bank are therefore no longer the legal owners of this money, with the bank holding it in trust for them, but rather they are one of the general creditors of the bank"

http://www.bankofengland.co.uk/research/Documents/workingpapers/2015/wp529.pdf

[Lord D'arcy Pew]

2 hours ago, Fromage Frais said:

"access to an appropriate amount of their covered deposits to cover the cost of living within five working days of a request"

 

Enough money for the bus fare to the soup kitchen?

[Lord D'arcy Pew]

1 minute ago, Assume The Opposite said:

I don't think most people know that a deposit is a loan to the bank, and you have no legal right to that money once it's deposited. Your account is an 'account' of what they owe you. 

Who said that? The Bank of England!

"Depositors who deposit their money with a bank are therefore no longer the legal owners of this money, with the bank holding it in trust for them, but rather they are one of the general creditors of the bank"

http://www.bankofengland.co.uk/research/Documents/workingpapers/2015/wp529.pdf

Millions of people get their earnings  paid into bank accounts, money that they have no legal right to.

I think we should all be paid in cash, at lest we will own our own remunerations.  Why pay a banker for a week of my work?

 

If they want a cashless society they need to think again.

 

[crouch]

15 minutes ago, TwoTearsInABucket said:

Well FMP. This would backfire so badly as people shifted their money out of banks.

 

I would expect that there would also at the very least be restrictions on the use of cash. Some economists (Ken Rogoff) are advocating a ban on cash.The general idea is that you should pay up and not be given the means of not paying up.

[Bsmf]

3 hours ago, Errol said:

The main bit for NS&I/Premium bonds is the part where the Treasury reserves the right to amend any and or all terms and conditions for any reason and at any time.

This would naturally be used to suspend redemption, change values, or pretty much anything else you can dream up.

Isn't the point with NS and I that if they go tits up money will probably be the last of your worries?

[TheCountOfNowhere]

When will the bank runs begin ?

[guest_northshore]

Good. I thought all the bail outs, dodgy incentives for returns with no risk, TBTF stuff was a bad thing.

[Habeas Domus]

The biggest worry with NSI accounts is that the government IT is run by the same people that run the Universal credit system, if your £12,000 deposit suddenly turns into a 12p deposit who are you going to call?

[Sour Mash]

1 hour ago, Bsmf said:

Isn't the point with NS and I that if they go tits up money will probably be the last of your worries?

Yep  - if it gets to the point where NS&I is freezing redemptions then the entire fiat currency system is totally screwed.  

The point of using it is that you don't suffer counterparty risk by relying on a bank to come good on promises to pay you the owed amount of 'government promises to pay'.  Better to just go straight to government promises to pay, direct.

[winkie]

1 hour ago, Habeas Domus said:

The biggest worry with NSI accounts is that the government IT is run by the same people that run the Universal credit system, if your £12,000 deposit suddenly turns into a 12p deposit who are you going to call?

 

[interestrateripoff]

3 hours ago, Assume The Opposite said:

I don't think most people know that a deposit is a loan to the bank, and you have no legal right to that money once it's deposited. Your account is an 'account' of what they owe you. 

Who said that? The Bank of England!

"Depositors who deposit their money with a bank are therefore no longer the legal owners of this money, with the bank holding it in trust for them, but rather they are one of the general creditors of the bank"

http://www.bankofengland.co.uk/research/Documents/workingpapers/2015/wp529.pdf

And you don't get a share of the profits either.

[ebull]

12 hours ago, Errol said:

The main bit for NS&I/Premium bonds is the part where the Treasury reserves the right to amend any and or all terms and conditions for any reason and at any time.

This would naturally be used to suspend redemption, change values, or pretty much anything else you can dream up.

 

12 hours ago, houseface2000 said:

https://www.nsandi.com/files/published_files/asset/pdf/premium-bonds-brochure.pdf

 

9 hours ago, Bsmf said:

Isn't the point with NS and I that if they go tits up money will probably be the last of your worries?

 

7 hours ago, Sour Mash said:

Yep  - if it gets to the point where NS&I is freezing redemptions then the entire fiat currency system is totally screwed.  

The point of using it is that you don't suffer counterparty risk by relying on a bank to come good on promises to pay you the owed amount of 'government promises to pay'.  Better to just go straight to government promises to pay, direct.

Thanks for all that.

So, the difference between an amount above the bail-in-limit [which will be zero if proposal happens] in a bank and that amount in NSI is that the system for banks to take it when they next need a bail-in is all in place and rules drawn up. Perfectly predictable and documented and you get told about again and again when opening an account. If [when] the SHTF it's what they have said they will do.

For them to take NSI they have to do something which does not yet exist. They could / may as well confiscate all shares, gold, real estate and other property at the same time.

I feel the conclusion is the bail-in-limit matters for this reason.

 

Edited November 21, 2017 by ebull

[dgul]

10 hours ago, TwoTearsInABucket said:

Well FMP. This would backfire so badly as people shifted their money out of banks.

 

Yup.  They'll discover that there was a good reason for having a bank deposit guarantee.