Central banks have reserves of cash. Much of it is used to support the currency although that was handed to Frankfurt years ago for the euro.
The REST of the cash is held in case of a banking crisis.
Spain has run down its reserves from €45bn to €12bn in 5 years. It now has no money to deal with a banking crisis based on a property collapse.
Ireland had €8bn 5 years ago and may be broadly the same now, I cannot find any information on it. Their foreign currency reserves and gold holdings are under €1bn from what i can make out but I don’t know the € figure. So it may be €8bn or €1bn
Mortgage lending last year was €40bn so the central bank is totally irrelevant ANYWAY
no seriously, we are fucked. I thought it was around 15%, holy mother of sweet jaysus!!!
Lads the last 2/3 posts even make this Bear a tad worried the scariest I’ve seen in the last few weeks. All this attention on Spain, means Ireland has been,
Written off already
Is to small an economy to make any sort of wave so lets lok at a more Important larger member Like SPAIN.
YOU TAKE THE BLUE PILL, THE STORY ENDS YOU WAKE UP IN YOUR BED AND BELIEVE WHATEVER YOU WANT TO BELIEVE… YOU TAKE THE RED PILL, YOU STAY IN WONDERLAND AND I SHOW YOU HOW DEEP THE RABBIT HOLE GOES.
2006 report next month if you look at the release date for 2005
most of the CB cash is 8% of the total stock of €€s out there, they administer that for Brussels, I cannot really find their 'own 'money bar foreign reserves and gold
The main bulk was “investment portfolio” some years back, which has disappeared…maybe to IFSRA ??? but it may all be gone now and that €0.6bn is all thats between us and a banking crash. But I do not know TBH
section 15 requires the central bank to manage our foreign currency reserves of which there are feck all really ( €0.6bn including Gold)
I’m still damned if I can figure out what happened to the other €7.4bn the Central Bank had in 2002 . Brendan Burgesses IFSRA may have it …or the NTMA …or Mc Creevy could have held up the Central Bank that time…or all 4 could have divvied it.
Either way one does wonder where the money will come from to prop up our banks !?!
The SSIA scheme imho was planned to be one of the biggest scams in the history of the state but unfortunately for FF it appears to have backfired big time.
Savers thought they were doing really well with the 25% top up.But quite a no. of them then cashed in and purchased a new car and guess what?, yeah they paid back up to 33% in VRT straight back into gov. coffers.Others went into shops and spent their SSIA on numerous items with either 13.5% or 21% VAT added on again going straight back to the exchequer.
What FF didn’t count on was a sudden change in public sentiment and consumers instead of spending all that lolly are using it to pay down debts and save the rest.
This is a big indicator that sentiment has shifted big time and doesn’t auger well for the property market either.
So what was originally meant to be just a money re-circulation scheme hasn’t really worked that way at all.
Peanuts in comparison to the 40 billion spent on property last year alone.
And it has to be remembered of the average 300k house price a massive 100k goes back to exchequer.
And yet it’s claimed that taxation has been reduced
Some joke
Systemic risk or a run on Irish banks might happen should a crisis start in the Spanish banking system (or vice versa even!) or any other Eurozone member.
I think securitisation is where the problems are likely to develop for the Irish lenders, especially if the ratings agencies (Moodys, Standard & Poors, Fitch) downgrade them and this is a resonable possibility in event of an economic downturn and the fallout from the United States (see ml-implode.com).
I don’t know the terms and conditions of these deals, but in the event of a downgrade the holders of these SPV’s would likely demand higher compensation for the added risk of holding them, thus putting a squeeze on bank profits, they may not be able to pass these costs on to an already squeezed mortgage payer.
If a securitised pool of loans does not behave as expected and losses rise to a level where security holders could lose money, the bank may be obliged to bail out the special purpose vehicle(SPV) or to make good investors’ losses. This could happen because the bank wants to protect its good name and its relationships with customers, but there would be no leeway given to the mortgage payer who gets into arrears and repossesion would quickly follow, especially so for the buy to let brigade.
Interesting.I have a friend who is in the process of building a house and took out the mortgage last week.He was chatting to the bank manager * and he suggested that in the event of further interest rate rises the banks may not be able to pass back the full rate rise to borrowers.
Apparently housing loans over the past number of months have collapsed and the way the banks look at it is that it is preferable to have a smaller profit margin on a larger no. of loans than a fatter margin on almost zero loans.
So it looks like they definitely won’t be able to pass back those costs on to an already badly squeezed mortgage payer.
Share holders won’t like this development one bit. *
!
