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Heading for the border, running for the bank exits

Wednesday, 16 May, 2012

“Greek depositors withdrew €700 million ($898 million) from local banks Monday, the country’s president said, as he warned that the situation facing Greece’s lenders was very difficult.” The Wall Street Journal

This is a classic Catch-22 situation as Greek depositors will increasingly want to avoid their valuable euros being turned into worthless drachmas, but a bank run will only accelerate the insolvency of the Greeks banks. Still, how would you react to the crisis if you were living in Patras or Heraklion? Would you risk leaving your savings in a system that’s on the verge of collapse, or would you move the money to a place where it might be safer?

Clearly, German, Dutch, British and Swiss banks can expect lots of new business. The only snag is that EU authorities are probably tracking the currency outflows and they might force the recipient banks to hand over the money pour encourager les autres, as it were, because in our networked times there’s nothing to stop panicked Portuguese, Spanish or Italian depositors from doing the very same. Anecdotal evidence acquired by Rainy Day suggests that Irish people are busy moving their euros north of the Border to the safety of the sterling zone.


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