Irish Times - "Is it time to increase protection on savings?"

llgon said:
They are still systemic banks so presumably the same would apply today.
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I think that the legislation since would bail in the depositors in some way? So the bank would continue but the depositors would lose some of their deposits. But maybe that was just limited to bondholders.
 
Dr Strangelove said:
Bank of Cyprus in 2013 bailed in all depositors over €100k.
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seeing the one you quoted in been reversed any other one,
Dr Strangelove said:
Bank of Cyprus in 2013 bailed in all depositors over €100
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The Government of Cyprus announced on Thursday 6 feb 2025 it was to start disbursing depositors compensation to depositors

the first payments to start end of june 2025 to depositors who were over the 100,000 guaranteed limited,


any other bank you know of,
Anyhow the good thing in Ireland is anyone pushing to burn Depositors were always ignored in the past and will always be ignored in the future,
 
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In 2007 the limit was 20,000 and people in general were not aware of what it was, the assumption was any money in any bank was safe.
I doubt anyone was deciding to split 40k between BOI and AIB because of the limit.

The idea that people should only save in a bank to the guarantee level is quite new, as is the unfortunate side effect of many banks only paying out interest up to 100k.

For the new fintech banks, they need to design their products around the guarantee. Customers realize that the guarantee could be the actual protection. The 100k limit on many products for interest payments is at least partly a desire on their part to not encourage customers to hold more than 100k and reduce their risk of becoming part of a general fintech run when some other similiar bank causes a panic.

You have the systemic banks where customers (including credit unions, pension funds etc.) expect the relevant government to step in for literally any level of deposit, and fintechs being kept at 100k. The big banks will not lobby for an increase in the guarantee because it undermines their business so not moving the limit is not good for competition.

General policies of ignoring inflation and keeping financial limits at nice round numbers is a lazy practice.

Going back to 2007 if someone with 200k was actively using the 20k guarantee as a limit they'd almost certaintly have ended up with cash in the likes of Anglo and related basket case banks. There's always going to be badly run banks - unnecessary diversification means you'll find them.
 
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I think a part that people are missing here is that when Cyprus had its problems, depositors (over 250k iirc) had to take a haircut on their savings.

For me, an increase of the depositor scheme is reasonable. I think having this scheme in place means that if we have an issue in the future that depositors will need to take a hit, but governments have less incentive to bail out smaller, less systemic banks. There will be less public outcry if the average person on the street isn't taking a hit and the government isn't on the hook for billions.
 
ashambles said:
n 2007 the limit was 20,000 and people in general were not aware of what it was, the assumption was any money in any bank was safe.
I
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The memories of the 2008 crash in finance is short for people who were insulated from most of the affects of the crash,
The USA Guaranteed limit was 250,000$
On March the 10 2023 Silicon Valley Bank crashed after a bank run the third-largest bank failure in USA History,
The FDIC Paid out to depositors who had more than 250,000$ on deposit,

The Government of Cyprus is returning depositors the money taken over the 100,000 Guaranteed limit,
The thing Governments and Banks fear the most as we seen with Silicon Valley bank is a run on the Banks driven by social media
as happened to Silicon Valley,
It is reckless of people who should know more to be pushing for depositors to take a hit on there deposits all deposits are not savings,

sooner or later loose talk/postings about depositors money not being safe will cause a run on some Bank,
 
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daheff said:
For me, an increase of the depositor scheme is reasonable. I think having this scheme in place means that if we have an issue in the future that depositors will need to take a hit, but governments have less incentive to bail out smaller, less systemic banks. There will be less public outcry if the average person on the street isn't taking a hit and the government isn't on the hook for billions.
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How Would the Government not be on the hook for Billions if it defaulted on depositors deposits, one sure way to be on the hook is to default,
I will leave it with you for now to figure out why not defaulting on depositors is always the best option,

I can see from your posting you are thinking outside the box,and it should be easily understood once you consider it more carefully why it is never a good reason to default on deposits,
Between all of Europe and the USA only one Government Defaulted on Depositors deposits in one Bank (Bank Of Cyprus that I know of (I am Interested in Knowing if there were more that one which I may not know about, but I suspect no other Government Defaulter on Deposits for very good reasons,
 
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Brendan Burgess said:
They are regulated. They are not guaranteed.
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True. If a company goes bust and it turns out that it was when you lent it money but the auditors through gross negligence had not reported the insolvency, I think there is a legal case to go after the auditors.
I remember those dark days and took some comfort from Neary assuring me (the public) that there was only a liquidity problem and not a solvency problem. Wrong!! Not only wrong for the misinformation but wrong for letting it happen (unlike the auditors).
 
bkenn14 said:
How Would the Government not be on the hook for Billions if it defaulted on depositors deposits, one sure way to be on the hook is to default,
I will leave it with you for now to figure out why not defaulting on depositors is always the best option,

I can see from your posting you are thinking outside the box,and it should be easily understood once you consider it more carefully why it is never a good reason to default on deposits,
Between all of Europe and the USA only one Government Defaulted on Depositors deposits in one Bank (Bank Of Cyprus that I know of (I am Interested in Knowing if there were more that one which I may not know about, but I suspect no other Government Defaulter on Deposits for very good reasons,
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I'm not saying that governments would let a bank go to the wall and just sit on their hands, but in my view, the depositor scheme gives them that option. mostly depositors would be covered by the guarantee scheme (which is paid by the other banks). The fall out (for a smaller bank) would be lower than a systemic bank. If push came to shove the government (of whichever country) could refuse to save the bank.

From what I know, Cyprus was the first time any kind of bail -in was enforced. But once its been done once and a precedent set, be sure it'll happen again.
 
daheff said:
From what I know, Cyprus was the first time any kind of bail -in was enforced. But once its been done once and a precedent set, be sure it'll happen again
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Thanks for your reply,re Cyprus only one you know of, It is the only one I know of also, I was expecting people who were pushing for default on Depositors to have a big big list that they knew about and were happy to share with other posters,

The Cyprus Government is reversing the Depositors Bail in, starting in June 2025,I wonder will anyone try and take this statement down a rabbit hole,
and for good measure they are also returning the money to Bondholders,
Must have been a very good Idea in the first place,;)



The money is now been returned to Depositors starting next month so very shortly no Government anywhere in Europe or USA will have defaulted on depositors,
I will get back to you on why no Irish Government would be so silly to default on Depositors deposits in Anglo Irish and Irish nationwide,
 
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