Wednesday, May 16, 2012

Flight by depositors from Greek banks

"The steady outflow of deposits from Greek banks hasn’t yet turned into a full-blown bank run, and the European Central Bank has nearly limitless capacity to provide banks with additional liquidity. But economists have long warned that a run on banks could develop if the population fears Greece’s departure from the euro is imminent and that their savings would evaporate.

A bank run could trigger the euro exit if it reaches a scale that forces Greek authorities to freeze bank accounts and print their own currency to keep the financial system alive.

If Greece leaves and investors begin to question the viability of the euro in other vulnerable countries, such as Spain and Italy, Germany and the rest of Europe could be forced to take bold action to keep the currency from collapsing."

The above from the Wall Street Journal today. Read our former analysis and advice regarding Europe posted on this blog the last few years. Our readers should be well prepared and positioned.

Geir Solem
Copyright (C) 2012 all rights reserved

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