Peston says Uk to also protect 100% of savings

beaujolais-nouveau

1echidna wrote: »

Rather like Gordon Brown on ending African poverty - no one. The government would default rather like Argentina did once and people would be told that one day they would get their money - probably when inflation had destroyed a lot of its value.

In the last two days, I've seen comments in forums on both sides of the Atlantic now saying that we are about to see a different sort of "bank holiday" - viz, days when the bank doesn't have to give you any of your money or only a little bit of it at a time. Days when the ATMs are switched off.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x4173241

Apreciar

The question of who is going to fund it is in the main irrelevant. If by making the statement that savers are protected it prevents a run on weak banks it makes it easier for them to survive. So there would nt be a need for funding, so it does not cost.

Patr100

Peston now changes his tune....

I don't now expect an immediate decision by the Chancellor of the Exchequer to follow the example of the Germans and offer a full 100 per cent guarantee to protect the savings of ordinary retail savers.
Why not?
Well Alistair Darling and the Treasury can't get any sense out of the German government about what it is precisely that they are doing.

http://www.bbc.co.uk/blogs/thereporters/robertpeston/2008/10/german_guarantee_lost_in_trans.html

Stavros_3

Quote - Why not?
Well Alistair Darling and the Treasury can't get any sense out of the German government about what it is precisely that they are doing.

Thats the problem Chamberlain faced in whether the Germans were going to invest in Poland or checkoslovakia first....... I'll get my coat

Ian_W

Well Alistair Darling and the Treasury can't get any sense out of the German government about what it is precisely that they are doing.

Which all sounds a bit like what we can't get out of Alistair and the Treasury - if you get my drift!

geepster

dunstonh wrote: »

I wonder who is going to fund that then?
I find the whole thing rather fascinating at the moment.
Countless times we savers have been told not to panic or worry by the government but it now seems that other governments are either panicking or don't have faith in the banking system as they are guaranteeing 100% of deposits (or is this solely down to people power?).
If our government follows suit, I wonder if it will make the Banks too complacent and give them a "don't care" attitude to interest rates (ie not competetive) or will it make them realise that they could now accumulate serious money from savers and thereby persuade them to make their interest rates more competetive so they can attract more money from savers.
A long winded post I know but isn't it interesting?

Reaper

I reckon the government is currently getting the worst of two worlds. They have informally made it known that they would protect the lot but won't come out and commit to it.

That means they have all the liabilities without any of the benefits - money is flooding to Irish banks instead of UK ones.

Either Ireland has to withdraw their offer because (as that piece says) it is anti-competitive in Europe, or everybody does the same. I'd favour the latter and I think they would end up paying less overall because savers would then have the confidence to leave the money with the banks. That means less panic withdrawing when whispers go round.

EDIT: ooh look - my 2000th post.

Aegis

geepster wrote: »

I find the whole thing rather fascinating at the moment.
Countless times we savers have been told not to panic or worry by the government but it now seems that other governments are either panicking or don't have faith in the banking system as they are guaranteeing 100% of deposits (or is this solely down to people power?).
If our government follows suit, I wonder if it will make the Banks too complacent and give them a "don't care" attitude to interest rates (ie not competetive) or will it make them realise that they could now accumulate serious money from savers and thereby persuade them to make their interest rates more competetive so they can attract more money from savers.
A long winded post I know but isn't it interesting?

I think it's largely just to calm the depositors down. It's the panic that's most harmful in this environment, as any bank can effectively be brought to its knees if there's enough scaremongering to cause people to withdraw their savings en masse. With a blanket guarantee we'd see a little more stability as people wouldn't worry so much about their deposits.

Of course, it would still be an absolute disaster if a major bank were to fail, and it would probably cause more harm than good in that eventuality...

Stavros_3

Ireland - Greece - Germany.............Whose next

fatpig_2

San Marino?