By Red Pill  |  07-28-2017   News
Photo credit: Alexsalcedo | Dreamstime

The European Union has announced in a new document that several EU countries are now considering new measures which would allow them to temporarily stop their citizens from withdrawing money from their personal and business accounts to prevent bank runs.

The new move is aimed at assisting in the rescue of lenders that are deemed to be failing or likely to fail. Critics however suggest it could create a disturbance in the confidence of the banking system or even be responsible for worried withdrawals similar to that which occurred prior to the Great Depression due to increased fears of a banking failure being imminently foreseeable in the future.

The new legislation which has been in the works since the beginning of this 2017, comes less than two months after an initial run on deposits occurred at Banco Popular contributed to the collapse of the once powerful Spanish lender.

This new proposal is occurring while there is a major dispute amongst European countries over how to properly deal with the troubled banks. It's been slightly over ten years since the last major financial crash forced the European Central Bank to print billions of Euros In order to prevent a dangerous economic slump.

The new idea hopes to grant supervisors the power to temporarily block bank accounts at struggling lenders, being call "a feasible option”. Sources close to the Estonian Presidency however say that EU member states were divided on the issue.

Several EU countries already allow a moratorium on bank payouts during insolvency procedures at the national level, such as Germany, who strongly supports the measure.

"The desire is to prevent a bank run, so that when a bank is in a critical situation it is not pushed over the edge," German Government's insiders said.

To help secure citizens who are saving cash, and ensure they can meet their immediate financial needs, the Estonian paper, dated July 10th, recommended a new introduction mechanism that could allow the depositors to withdraw "at least a limited amount of funds."

Banks, though, say it would discourage saving. Meanwhile in the US such a measure wouldn't have a chance, as Americans would be marching into the capitol with torches if the banks tried to stop the people from withdrawal.

"We strongly believe that this would incentivize depositors to run from a bank at an early stage," Charlie Bannister of the Association for Financial Markets in Europe (AFME), a banking lobby group, said.

The Estonian proposal was discussed by several EU envoys on July 13th but no final decision was made, according to EU officials.

New discussions are on track to be continue in September. Approval from EU lawmakers however would be required for any final decision.

The new plan, if agreed upon by member states, would greatly contrast with the various legislative proposals made by the European Commission in November that aimed to strengthen supervisors' powers to suspend withdrawals.

In those discussions there were several groups excluded from the moratorium, including insured depositors, which under EU rules are those below 100,000 Euros, or $117,000.

According to those who are writing the measure, under the new plan being discussed by EU states, pay-outs could be suspended for five working days and the hold on personal funds could be extended to a maximum of 20 days in exceptional circumstances, something that could devastate the people the likes of which Europe has never seen.

Source: https://finance.yahoo.com/news/eu-explores-account-freezes-prevent-154525325.html

Share this article
Thoughts on the above story? Comment below!
0 Comment/s


What do you think about this article?
Name
Comment *
Image
12-08-2017   Science 12 Comment/s

Gene Linked To Homosexuality Found

12-07-2017   News 9 Comment/s

Lord's Prayer to be Changed by Pope