Irish government guarantee bank deposits

cvd

If the BBC has reported the vice chairman of the Irish Parliament's Finance Select Committee correctly, it seems that now is the time to move your money OUT of Irish banks. The Irish government cannot honour the promise it has made if there is a "collapse" of the financial system in Ireland.

http://news.bbc.co.uk/1/hi/business/7648750.stm

Plasticman

cvd wrote: »

If the BBC has reported the vice chairman of the Irish Parliament's Finance Select Committee correctly, it seems that now is the time to move your money OUT of Irish banks. The Irish government cannot honour the promise it has made if there is a "collapse" of the financial system in Ireland.

http://news.bbc.co.uk/1/hi/business/7648750.stm

They don't need to - the large number of deposits that the Irish banks are suddenly getting will overcome their inability to borrow more money. I suspect the Irish banks are now more stable than they have been for a long while.

gozomark

If the BBC has reported the vice chairman of the Irish Parliament's Finance Select Committee correctly, it seems that now is the time to move your money OUT of Irish banks. The Irish government cannot honour the promise it has made if there is a "collapse" of the financial system in Ireland.

http://news.bbc.co.uk/1/hi/business/7648750.stm

and neither can the UK govt, even if it is only £ 35,000

cvd

and neither can the UK govt, even if it is only £ 35,000

They can just print it.

gozomark

cvd wrote: »

They can just print it.

they could, but they wouldn't - lets say only Barclays went bust and the UK Govt compensated all deposit holders 100% - UK debt/GDP would more than double

all Govt (whichever country) guarantees on the biggest banks are built on sand - some banks are too big to fail, others are so big they have to fail ....

edwinac_2

"guarantees are cheap to give but ruinous to honour"

cvd

they could, but they wouldn't

I think you have a good point - but it applies even more to Ireland which has very few banks.

Would you invest your money in a company when the deputy finance man says they are close to economic collapse, even though he promises to pay you back?
The man is patently incompetent.

PS. All of my posts in this thread are a bit tongue in cheek.

gozomark

"guarantees are cheap to give but ruinous to honour"


I'd go further

"guarantees are cheap to give, the insurance premiums are excellent, but ruinous to honour"

just imagine - lets say the Irish banks are paying 0.1% to insure their deposits - € 400bn at 0.1% = € 400m to the Irish treasury. Irish banks can lower their interest rates by say 0.25% = € 1bn to Irish banks - a win,win, as long as confidence remains OK

gozomark

British savers seek refuge in Irish banks
http://uk.reuters.com/article/businessNews/idUKTRE4916NA20081002

gozomark

Exodus as UK savers switch to Irish safe haven
http://www.ft.com/cms/s/0/8f0c488c-90e3-11dd-8abb-0000779fd18c.html


The first three days of this week have seen three times the normal level of new accounts and inquiries about Irish banks......

This influx of savers into Irish banks may now be further increased by the decision of Northern Rock to close accounts to new customers, to prevent a breach of competition regulations