MSE News: Pensions and savers hit as Bank prints more money

oldvicar

jimjames wrote: »

If the govt debt can be reduced by such a large amount why aren't they doing it all the time - apart from creating inflation?

They ARE doing it all the time.

But its not reducing govt debt (except in real terms through higher inflation).

MoneySaverLog

Thrugelmir wrote: »

Without QE the situation could be far worse.

The economy is extremely weak. There's no easy answers.

And how long do they continue to throw more money at a failing solution?

There has to come a time when enough is enough

mrBlue

As has already been suggested, a withdrawal of savings from a major bank would bring the pains on. It's not necessary to try all the banks - just 1: After all, when a co-ordinated Twitter assault on the school who banned a girl from taking photos of school meals resulted in a capitulation u-turn in about 6 hours, a co-ordinated mass withdrawal of £20K on a Friday afternoon at 14:00 by 50,000 people - into cash - could double LIBOR and trigger panic at the BoE in 5 minutes. As I have personal experience of an annuity for life being 30% less than it should be as result of all this nonsense, it's about time these chancers were made to pay.

Ken68

So what do I do with my savings. Am I supposed to draw some out and spend to keep people in work or create more jobs.
Am looking for a contingency plan.
Lock it away or
put some under the mattress maybe.

ColdIron

I recommend moving your money out of the big four, not for some higher moral purpose but simply because the rates are usually poor and the service can leave a lot to be desired

I allow Barclays to run my current account but all my cash is in Aldemore, Investec, Metro Bank, Nationwide, Virgin, NS&I etc

Better rates, with FSCS they are just as safe and not an Indian call center in sight

Broadwood

ColdIron wrote: »

I recommend moving your money out of the big four, not for some higher moral purpose but simply because the rates are usually poor and the service can leave a lot to be desired

I allow Barclays to run my current account but all my cash is in Aldemore, Investec, Metro Bank, Nationwide, Virgin, NS&I etc

Better rates, with FSCS they are just as safe and not an Indian call center in sight

We are in a similar position - current account with Barclays plus a small float in their e-savings "reward" which pays next to no interest. Serious savings are with NS&I (Index-Linked) in both names and in The Coventry's new telephone (& online) saver account solely in my wife's name as she gets the interest gross (being a stay-at-home housewife).

Our weakness in light of the recent IT problems is that all our savings accounts are linked to our Barclays current account. As an insurance we are thinking of opening a branch account with Britannia (very local to us) purely for an emergency fund to cover any future problem with IT at Barclays or my employers' bank. I have another 12 years to work before reaching 67 so worrying about my 3 pension pots isn't a major worry right now as the financial landscape will be very different by then probably well beyond my control. All we can do is avoid keeping all our eggs in the same basket.

The events of the last month SHOULD have made everyone take a serious look at how they run their finances day to day !

bigadaj

But why does everyone keep their current accounts with the big four, there's no need. The only positive might be that they are frequently loss leaders if small balances are maintained and transactions are frequent, as the banks want to sell you other products, so maybe it might undermine them?

ColdIron

I use Barclays for my current account partly from habit but also because their online banking is actually pretty good

I opened an account at Nationwide that required me to also open a FlexAccount that I have never used

In light of the recent troubles I will move some emergency cash there, thanks for the timely reminder Broadwood

Broadwood

bigadaj wrote: »

But why does everyone keep their current accounts with the big four, there's no need. The only positive might be that they are frequently loss leaders if small balances are maintained and transactions are frequent, as the banks want to sell you other products, so maybe it might undermine them?

For me personally I've stayed with Barclays (since leaving school in 1975) because there has been a branch within walking distance wherever I've lived. Also I've never had anything other than the odd minor problem with them over the years, and these were quickly resolved. I was an early convert to online banking and it's been a totally positive experience to date apart from the fact that their e-savings accounts now pay "loss-making" interest when originally they were quite competitive.

I guess it's a case of convenience coupled with a "better the devil you know" scenario. If Barclays' level of service or satisfaction deteriorated then I would consider a move, but not otherwise, and certainly not before the outcome of the current investigations and proposed banking industry changes.

jamesd

mrBlue wrote: »

As has already been suggested, a withdrawal of savings from a major bank would bring the pains on.

No, it wouldn't. The banks have an effectively unlimited credit facility at the Bank of England.

mrBlue wrote: »

a co-ordinated mass withdrawal of £20K on a Friday afternoon at 14:00 by 50,000 people - into cash

The retail banks will probably not be able to provide £1 billion in cash on the same day without notice, particularly at the smaller branches. Many of those people will be told to come back on Monday or Tuesday after more cash has been delivered.

Most would also be asked to go through anti-money laundering checks. I recommend that anyone who tries it does not give "trying to cause a run on this bank" as the reason for withdrawing the money.

mrBlue wrote: »

could double LIBOR and trigger panic at the BoE in 5 minutes.

Not a chance. The bank concerned would just withdraw some money from its reserve account at the BoE, as usual, when it purchased the extra cash from the BoE.

Consider that in June 2012 the cash reserves held by the Bank of England, just in notes and coins, amounted to £228 billion. The latest round of quantitative easing is £50 billion, fifty times the amount. The daily volume of CHAPS transactions is around £277 billion plus around £16.9 billion of BACS and £2 billion of Faster payments (Financial Stability Report, June 2012, Global Financial Environment section, page 11) (table of contents).

The core tier 1 reserves held by the UK banks even back in 2010 amounted to around £273 billion ( June 2010 FSR page 45). Total assets are around £7,500 billion (page 47). The amount you're considering is insignificant compared to those numbers, so you'll need to be sure that you pick a small bank. And somehow find one with sufficient customers who will listen to you and who have enough money in their accounts to do it.

The amount you're considering is too small to matter, except for the short term unavailability of sufficient bank notes in a branch.

mrBlue wrote: »

As I have personal experience of an annuity for life being 30% less than it should be as result of all this nonsense, it's about time these chancers were made to pay.

Who will pay? It's not going to be the bankers. Maybe the people who own the banks? That's mostly us, via our pension funds or taxes.

The people who take the money out will be losing around £1.60 a day in interest (at 3%) and will have their money at risk of theft. What should they do with the cash now? Remember that they can't spend it, if they did it'd just go back into the banks...