current consensus re. risk of bail-in or rolling back to the punt?

Read on another board someones suggestion that when the ECB stress tests are carried out later this year, there is potential for a bail-in and deposit haircut to follow.

How do people weigh up the likelihood of this coming to pass? Would this be confined to deposit holders in the problem banks (aib, ptsb, etc) or could it be applied across the board? Would it be likely to be applied to deposits of less than 100K?


Secondly, Damien Kiberd is suggesting that the only way to get IRL INC. back on its feet may still be dropping out of the euro => LINK.

What are peoples thoughts on the likelihood of such an eventuality?

You'd hope after 6-7 years of this "crisis" that depositors wont loose money at this stage.

aristotle said:

You'd hope after 6-7 years of this "crisis" that depositors wont loose money at this stage.

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I would have hoped so too - but if certain banks still need a secondary infusion of cash, where is that cash going to come from?

If the idea of exiting the euro re-emerges, then that equally is going to wipe value off all deposits held.

serotoninsid said:

Read on another board someones suggestion that when the ECB stress tests are carried out later this year, there is potential for a bail-in and deposit haircut to follow.

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There is no magic involved in calculating T1 ratios, so what event has occurred in the last 12 months that would cause Irish banks to fall from being in the top flight (on paper, which is all that counts in this exercise)

serotoninsid said:

Secondly, Damien Kiberd is suggesting that the only way to get IRL INC. back on its feet may still be dropping out of the euro => LINK.

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Positive stories on the economy do not sell papers! The only credible research on this idea that I've seen comes from internal Credit Suisse report and their conclusion was that an Irish Punt and a D-Mark would appreciate by about 20% over the current Euro! Clearly this would have a major impact on exports for both countries and have a major impact on their economies. This is not surprising really since the curreny of net exporters rises as a matter of course.

Jim2007 said:

There is no magic involved in calculating T1 ratios, so what event has occurred in the last 12 months that would cause Irish banks to fall from being in the top flight (on paper, which is all that counts in this exercise)

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Far from knowledgeable on the subject - but for that very reason, asking the question. So these banks won't need an infusion of cash? Can I leave my (modest but very hard earned...) savings on deposit without fear?

Jim2007 said:

Positive stories on the economy do not sell papers! The only credible research on this idea that I've seen comes from internal Credit Suisse report and their conclusion was that an Irish Punt and a D-Mark would appreciate by about 20% over the current Euro! Clearly this would have a major impact on exports for both countries and have a major impact on their economies. This is not surprising really since the curreny of net exporters rises as a matter of course.

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Wow? The IR£ would appreciate? I thought the whole idea of taking that option was to allow the opportunity to devalue it - and make us more competitive - and in that way, get the economy rolling again?
I assumed that if overnight we switched to our own currency, we'd probably lose 20% value?

Can I leave my (modest but very hard earned...) savings on deposit without fear?

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yes you will be covered for up to €100,000 by the Deposit Guarantee Scheme, even in the unlikely scenario that Irish depositers are hit.

I reckon the likelihood of a deposit bail-in has increased but is still small. Personally, I have a lot more than the guaranteed amount in a number institutions. For any realistically plausible haircut amount, I'll still be better off than had I not deposited it. I have very decent rates locked in from a few years ago. When those term deposits mature I won't be leaving them where they are because I no longer think that current interest rates justify the bail-in risk.

serotoninsid said:

Far from knowledgeable on the subject - but for that very reason, asking the question. So these banks won't need an infusion of cash? Can I leave my (modest but very hard earned...) savings on deposit without fear?


Wow? The IR£ would appreciate? I thought the whole idea of taking that option was to allow the opportunity to devalue it - and make us more competitive - and in that way, get the economy rolling again?
I assumed that if overnight we switched to our own currency, we'd probably lose 20% value?

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It depends on the exporters, if we left the euro we could very well lose a bunch of IT multinationals. However we would still have quite a lot of agri ones. Every time we move an export out of the country we bring foriegn currency in and sell local. Pushing up the value of the local currency.
This is why the euro is of such benift to germany and us and it allows some devaluing of the exported product making it cheaper than that of a competeing country.