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Author Topic: EU proposes account freezes to prevent bank runs  (Read 496 times)
tyz
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July 30, 2017, 02:11:33 PM
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European Union states have proposed a new measure which would effectively allow them to freeze bank accounts before a bank run takes place. The measure was planned earlier this year in order to prevent bank runs similar to that of Banco Popular last month. The proposal wants to prevent depositors from pushing over the edge banks that are already failing or will likely fail.

According to EU rules, each depositor that has less than 100,000 euros deposited in a bank account is insured from a bank run. But under the new plan, a potential bank run could force the supervisors to freeze bank accounts of all depositors, and thus freeze withdraws from bank accounts.
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Anarchist
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July 30, 2017, 02:58:30 PM
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It doesn't change a lot  Grin The money on your account doesn't belong to you. This money is the property of the bank and it does what it wants. So the balance on your account is only a promise from the bank to repay you, if no bankrupt, there is all the difference.
Those who believe that the amount shown on their account is stored in the vaults of the bank are wrong!.
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July 30, 2017, 03:02:43 PM
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This is another reason why crypto currencies are so attractive. Fiat money is such a con!
neurotypical
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July 30, 2017, 03:10:25 PM
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European Union states have proposed a new measure which would effectively allow them to freeze bank accounts before a bank run takes place. The measure was planned earlier this year in order to prevent bank runs similar to that of Banco Popular last month. The proposal wants to prevent depositors from pushing over the edge banks that are already failing or will likely fail.

According to EU rules, each depositor that has less than 100,000 euros deposited in a bank account is insured from a bank run. But under the new plan, a potential bank run could force the supervisors to freeze bank accounts of all depositors, and thus freeze withdraws from bank accounts.

As far as I know it was always like this. Unfortunately I don't have 100,000 EUR but if I did, I would never keep more than 100,000 in a single account. I would have different bank accounts because generally having more than 100,000 in a single bank is an huge risk, they can never guarantee to return you anything beyond that 100,000, and freeze policies are scary, you always want to be able to have your money at any time, so the only solution that I see as logical is to keep the money spread across different bank brands in case of a collapse.
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July 30, 2017, 03:16:11 PM
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Most countries have mandatory insurance so if a bank goes bankrupt you'll be covered for up to 100k in your account. Holding money at different banks won't make a difference because it's usually the same insurance at each bank. You can hold 100k in your account, 100k in a joint account and 100k in your spouses account and be covered for 300k though. That's the only real loophole. But who the hell would hold 300k in a bank!?!? Invest that into crypto!
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July 30, 2017, 06:46:01 PM
Last edit: July 30, 2017, 07:08:35 PM by Hydrogen
 #6

Imagine a person has bills to pay. They need to pay their mortgage, rent, insurance, car payment, electricity, buy food, etc.

They can't pay their bills due to a bank freezing their money.

These types of difficulties could provide motivation for people to use crypto to store their money rather than a bank.

Bibite
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July 30, 2017, 07:44:53 PM
 #7

Imagine a person has bills to pay. They need to pay their mortgage, rent, insurance, car payment, electricity, buy food, etc.

They can't pay their bills due to a bank freezing their money.

These types of difficulties could provide motivation for people to use crypto to store their money rather than a bank.

Those possible limitations are concerning not the main bank account, but a saving account and others similar. You don't use your saving account to pay bills. In my country, we can't even if we want. As if you use it to pay the regular bills you misuse the account and can lead to some problem with your bank. It's like if you run your company with a standard bank account
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July 30, 2017, 09:24:49 PM
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Those possible limitations are concerning not the main bank account, but a saving account and others similar. You don't use your saving account to pay bills. In my country, we can't even if we want. As if you use it to pay the regular bills you misuse the account and can lead to some problem with your bank. It's like if you run your company with a standard bank account

AFAIK the transaction freeze doesn't apply exclusively to savings accounts. It applies to all accounts.

Whatever type of account you use to pay your bills will be affected.

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August 02, 2017, 09:50:51 PM
 #9

Those possible limitations are concerning not the main bank account, but a saving account and others similar. You don't use your saving account to pay bills. In my country, we can't even if we want. As if you use it to pay the regular bills you misuse the account and can lead to some problem with your bank. It's like if you run your company with a standard bank account

AFAIK the transaction freeze doesn't apply exclusively to savings accounts. It applies to all accounts.

Whatever type of account you use to pay your bills will be affected.
This is why you need to have a plan B for the case if all hell broke loose, like:
To have your savings in different banks (some additional cost occures but it's the price of the security)
To have at least two bank accounts (with debit cards), for daily purposes (also has additional costs)
To have an amount available "offline", if ATMs stop
To check news if it's about banks that has problems, and act if neccessary

In the EU, 100.000 EUR is the limit of the insurance, when the dedicated fund helps people (and only people, not companies, nor municipalities) to get back their funds if a bank fails. But as it was mentioned, this insurance applies for each bank, so it's a rule of the thumb to have only 100.000 EUR in each bank if you want to be on the safe side, if you have your savings in banks and you're not investing it into something else (property, etc.)

And if all banks fail in a country, bills, insurances and rental fees will be the last things you care about, when the rush is for food and drinking water...
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August 03, 2017, 12:18:24 AM
 #10

That seems as a reasonable follow up of the EU policy. At first they promote using bank cards and removing banknotes from economy trying to make cashless society and then someone is surprised why their accounts might be frozen. The main idea of bitcoin is uncontrolled currency and this is not only emission as most users think.
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August 03, 2017, 12:29:10 AM
 #11

Just another reason to keep your money out of banks in the EU, or just leave the EU   Lips sealed Lips sealed

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August 03, 2017, 12:49:24 PM
 #12

I do remember those history of those bank, and i can say thats why bitcoin and crypto must grow, if all people put their money over crypto no bankrupts would happen soo easy, banks were good but they belong to the past already, crypto is the future, why we need to trust our money into banks? Wonder the old people that had all their savings at those bank, anyway, as i know the buyed said it would let the clients with their capital something that hasnt happened at all.
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August 03, 2017, 03:41:52 PM
 #13

That's because people turn to crypto. Crypto no controller just like we save our money in the bank, if one day the storage account we have in the bank in the free then what we will be able to do, of course the problem gained. But not with crypto. Accounts that we own are controlled by the owner, without any interference from any party. In crypto I really like the security features, as well as easier way of transaction, unlike the bank that we know literally, because there could be a freezing on the account we have in the bank

 
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seraph_the_wise
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August 27, 2017, 10:46:09 AM
 #14

It doesn't change a lot  Grin The money on your account doesn't belong to you. This money is the property of the bank and it does what it wants. So the balance on your account is only a promise from the bank to repay you, if no bankrupt, there is all the difference.
Those who believe that the amount shown on their account is stored in the vaults of the bank are wrong!.

I would even go a step further and say that even the physical money is not one's property, but a loan to that corresponding government at negative interest (due to inflation). Banks are just another link in the chain, and not that bad since they DO play with our money but at least provide some return on it (well... mostly).

As for the 100,000 euro EU deposit guarantee per bank, yes that amount is guaranteed by the ECB and to be fair, reserve requirements are now higher....but what most probably don't know is that guarantee is conditional and not unilateral (go and read the thousands of pages of official docs). What this means, is that when the next severe crisis occurs and this contingency is actually needed, the total pool of funds for all banks is capped at a total value, and when every single banks need liquidity to provide to the clients, only a few will get it. The rest will be left hanging. Aka: not enough money to save every single depositor if lots of banks go bust.
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August 27, 2017, 11:02:56 AM
 #15

Just another reason to keep your money out of banks in the EU, or just leave the EU   Lips sealed Lips sealed
Are you saying that such situation only in the EU? You probably forgot about the mass falling banks in the United States. You can continue to give examples of more and more. In all countries the banking system has long turned into bubbles that regularly burst. I don't trust them. I hope that bitcoin will never be like a banking system.
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August 29, 2017, 02:25:09 AM
 #16

We all know that banks does lend money they dont have to others, and well if all costumers go there and withdraw bank will close in the same moment, even having a small protection, how long will take to get acess to the money like those people that got their accounts frozened. We need banks do do trades at crypto, but if i own more then 100k euros i would split it into more accounts to avoid loose my money, thats why i love bitcoin since its very hard to have any similiar issue.
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August 29, 2017, 03:11:57 AM
 #17

We all know that banks does lend money they dont have to others, and well if all costumers go there and withdraw bank will close in the same moment, even having a small protection, how long will take to get acess to the money like those people that got their accounts frozened. We need banks do do trades at crypto, but if i own more then 100k euros i would split it into more accounts to avoid loose my money, thats why i love bitcoin since its very hard to have any similiar issue.

Exactly, central controlisca threat to our financial freedom and iris imperative for us all to wake up and move our funds and assets into the more decentralized Bitcoin where such policies are never tolerated. How can you freeze these accounts?
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