Jump to content
House Price Crash Forum

How safe is your money in the Bank?


Recommended Posts

With an unpredictable and unforeseeable event like the Coronavirus, how safe is money deposited in current and savings accounts (inc ISAs etc) in the UK? With Fractional Reserve banking where only a portion of the money deposited exists as cash and the fact that bank income is going to be badly hit by people unable to service loans, how will the bank be able to maintain enough money in reserve. I know the government have a guarantee up to 85k, but I think this is only possible under somewhat normal circumstances, not in case like this where "all bets are off".

Link to post
Share on other sites
  • Replies 177
  • Created
  • Last Reply

Top Posters In This Topic

Top Posters In This Topic

Posted Images

39 minutes ago, astrid said:

With an unpredictable and unforeseeable event like the Coronavirus, how safe is money deposited in current and savings accounts (inc ISAs etc) in the UK? With Fractional Reserve banking where only a portion of the money deposited exists as cash and the fact that bank income is going to be badly hit by people unable to service loans, how will the bank be able to maintain enough money in reserve.

We don't have fractional reserve banking in the UK.

 

Link to post
Share on other sites
1 hour ago, astrid said:

With an unpredictable and unforeseeable event like the Coronavirus, how safe is money deposited in current and savings accounts (inc ISAs etc) in the UK? With Fractional Reserve banking where only a portion of the money deposited exists as cash and the fact that bank income is going to be badly hit by people unable to service loans, how will the bank be able to maintain enough money in reserve. I know the government have a guarantee up to 85k, but I think this is only possible under somewhat normal circumstances, not in case like this where "all bets are off".

The government can just print 85k for everyone at the click of a mouse.

There is little danger of you losing NOMINAL value.

Fiat currencies lose REAL value daily, and would lose more in such circumstances.

Link to post
Share on other sites

I would actually say your money is pretty safe, as long as you are under £85k

 

However I could see your purchasing  being affected by inflation, maybe not immediately, because what is happening right now is quite deflationary, but in the next few years once all the crazy stimulus measures have been enacted.

 

My opinions have changed over the years, if this was 2012, I would be screaming this is it!!  all banks are about to collapse!!

Edited by reddog
Link to post
Share on other sites

So the nominal value remains but the actual buying power is reduced as inflation leads to higher prices for goods and services. So what you could buy 2 weeks back for £100 might cost £150 in 6 months time. If this is the case will house prices not be equally inflated?

Link to post
Share on other sites
1 minute ago, astrid said:

So the nominal value remains but the actual buying power is reduced as inflation leads to higher prices for goods and services. So what you could buy 2 weeks back for £100 might cost £150 in 6 months time. If this is the case will house prices not be equally inflated?

this could happen, certainly if it goes into a very high level of inflation people might pile into property.

 

However, I think if there are a lot of job losses, a lot of people won't be able to get mortgages, this might suppress the house prices relative to salaries.  

 

On the other hand don't count out the government contriving to give everyone in the country enough money for enough money for a deposit, and also lowering lending requirements.

 

Whatever happens, I think it will be 2 to 3 years before we know what the clear direction is.

 

 

Link to post
Share on other sites
3 minutes ago, reddog said:

this could happen, certainly if it goes into a very high level of inflation people might pile into property.

 

However, I think if there are a lot of job losses, a lot of people won't be able to get mortgages, this might suppress the house prices relative to salaries.  

 

On the other hand don't count out the government contriving to give everyone in the country enough money for enough money for a deposit, and also lowering lending requirements.

 

Whatever happens, I think it will be 2 to 3 years before we know what the clear direction is.

 

 

one of my biggest mistakes, was not realising in 2008 that countries can simply change the rules.

 

(obviously this only works in the short to medium term, in the long term the sort of rule changes we are talking about put the whole country in the danger zone)

Edited by reddog
Link to post
Share on other sites
8 minutes ago, Roman Roady said:

Ahhh well thats a visit to the local hardware shop for a chubb safe.

Not too good for the banks balance sheets.

There may be rules restricting the use of cash or the withdrawal of high value bank notes to frustrate the tendency to hold physical cash.

A better way is to buy gold bullion - physical gold.

Link to post
Share on other sites
11 minutes ago, crouch said:

There may be rules restricting the use of cash or the withdrawal of high value bank notes to frustrate the tendency to hold physical cash.

A better way is to buy gold bullion - physical gold.

I know.

Start with the withdrawal procedure now. Use the 300 pd limit EVERY DAY.

 

I started with PM's in 2013.

I would say its getting to be too late to buy physical now.

Link to post
Share on other sites
5 minutes ago, Roman Roady said:

 

Start with the withdrawal procedure now. Use the 300 pd limit EVERY DAY.

 

 

this is actually what people in Argentina had to resort to in the early 2000's.  

 

On a side note, when I had my first ATM card at about 14, the withdrawal limit was £300 pd - nearly 30 years later, it is still £300 pd

Link to post
Share on other sites
1 hour ago, reddog said:

 

 

51 minutes ago, crouch said:

A better way is to buy gold bullion - physical gold

Except gold price is tanking because holders of gold are having to cash in the gold to pay for margin calls etc.

 

Link to post
Share on other sites
40 minutes ago, reddog said:

this is actually what people in Argentina had to resort to in the early 2000's.  

 

On a side note, when I had my first ATM card at about 14, the withdrawal limit was £300 pd - nearly 30 years later, it is still £300 pd

I think this is largely a reflection on the reduced use of cash for higher value purchases. The reduced real value is still larger than the overwhelming majority of cash transactions. I recently advised my parents to use contactless as much as possible right now as you never know what is on any change you get given. 

Link to post
Share on other sites
33 minutes ago, crazypabs said:

 

Except gold price is tanking because holders of gold are having to cash in the gold to pay for margin calls etc.

 

It seems to me that the problem with the gold market is that it's 90% paper speculation and 10% real activity. If the price is tanking so much the better.

Link to post
Share on other sites
19 hours ago, scottbeard said:

The government can just print 85k for everyone at the click of a mouse.

There is little danger of you losing NOMINAL value.

Fiat currencies lose REAL value daily, and would lose more in such circumstances.

This is correct. However don't expect that money to be printed the day after the bank collapses. Ensure that you have access to alternative sources of cash - different institutions, physical cash, foreign currency and silver coins to cash in.

Link to post
Share on other sites

Nominally - I would say up to the FSCS limit, you're safe. In real terms because of helicopter money, you're not safe. Helicopter money will cause inflation and each pound will be worth less than when you deposited it.

Link to post
Share on other sites
10 minutes ago, warpig said:

Nominally - I would say up to the FSCS limit, you're safe. In real terms because of helicopter money, you're not safe. Helicopter money will cause inflation and each pound will be worth less than when you deposited it.

Agreed. Death and taxes.

Link to post
Share on other sites
14 minutes ago, LetsBuild said:

Scroll to the top of that website, they are unable to deliver your gold. Supposedly because of Covid19, but amazon is still able to deliver...

They also offer a storage facility.

Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
  • Recently Browsing   0 members

    No registered users viewing this page.

  • 415 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.