Eur Wedge On De Edge

If everyone lost their bank a/c’s, how would the country function?

It couldn’t and wouldn’t. It would literally mean long lines at soup kitchens. No more rent or mortgages being paid by anyone, most jobs gone, empty shelves at the supermarket like Bucharest 1975. I can’t see it and don’t think it will happen.

If I am not mistaken, not even Argentinians lost their savings in their default. Yes, their dollar-quality pesos turned into crappy pesos overnight, but that is not the same as savers actually losing their money and in relative terms everyone came out in the same boat at the far end. I think they did have withdrawal restrictions, which we might well have, but again that’s not the same as losing your money.

No-one will loose their bank account.

The savings in the account will loose some or most of its purchacing power.

If we both have €10,000 in savings, you with BOI and me in a german bank account.

Your euros are swoped for 10,000 puntnuas at a rate of 1:1

The puntnua then falls against the euro to say 3:1

You still have 10,000 puntnuas so you haven’t lost anything. Right?

Many people on here with auld wedge waiting to pick the bottom before buying a gaff may be thinking that this current situation might not affect them, as the prospective gaff will be priced in the same currency as the savings, right? After a redenomination, the savings will have only lost purchasing power against imports, yes? The trouble is that Irish property will suddenly have become a lot more attractive, sorry, I mean, less hideous to outside foreign investment, which would give house prices a relative fillip.

You are talking about Ireland leaving the Euro. I was talking about losing one’s money as a result of sovereign default, which seems to be a concern of some in this thread.

Well, that remains to be seen. I’m not entirely sure that the Irish government will be able to force foreign owned banks to convert, under european law. I don’t see that the Irish government would necessarily want to do that anyway. I think collapse and money locked up in deposit scheme red tape is a bigger risk still.

edit: copied in from signs of the depression…

Are you sure about this Puck?
The following seems to suggest otherwise? I really want to know the answer to this Q.

Sorry, i understand you now.

However the Argentinian example is still relevant.

Were ireland to default within the euro the government could still swop government bonds for private assets such as pension funds, bank accounts etc.

Of course they wouldn’t be STEALING your pension fund they would be buying all those equities,foreign currencies etc. from you in exchange for government paper.

They can just take your saving account through higher taxes eg. wealth levy, DIRT,Capital Gains etc

Converted into ‘National Solidarity Bonds’ or similar…

Yep. But I expect you will be able to use them as ‘money’ for certain purchases - a house for example (since there will be a seller who may have a mortgage or be NAMA!), taxes, university fees etc. They will be money-good for state or bank payments.

Bet you wont be able to pay taxes with them.

California paid its public sector with IOUs. There was no secondary market allowed in these bonds. And you werent allowed to pay taxes with them. The only thing you could do was sit on them and pray.

Actually, scratch all that, the deposit protection scheme should pay out in a max of three days not three months: … anguage=fr

You are right that the question has received a lot of attention here, but I’m not sure that anyone has the clear answer. I’ve followed the discussions, but I find the crucial question generally rests unanswered.

As I understand it, the point is that not all financial institutions active in the Irish market operate under a licence from the Financial Regulator. That’s the point about Rabodirect - it operates in Ireland under Rabo’s Dutch banking licence. That’s why you hear in the advert words to the effect of “ is regulated by the Dutch Central Bank”.

That’s why we’ve doubts (which I don’t think anyone actually knows chapter and verse on) as to how the Irish Government could instruct Rabo to alter its Irish deposits into Lenny Pennies. If Rabo went out of business, Irish depositors would be claiming out of the Dutch deposit guarantee scheme. So what’s it got to do with Lenny?

Now, I recall in a previous discussion someone saying that it would be in Rabo’s interest to let its Irish deposits be converted into Lenny Pennies - as we would have paid in good euros, but they would only have to repay us Lenny Pennies. In other words, Rabo would have no particular incentive to fight such a move. However, that’s not the same as saying that the Irish Government have the right to instruct them to do so.

I think the point is more where exactly Irish deposits in Rabodirect actually reside. Bear in mind, its an internet bank. They don’t actually have a branch in Ireland - just an admin office to do money laundering requirements, like Northern Rock. I don’t think anyone has clearly indicated where Lenny would have the legal right to instruct them to convert their Irish depositors funds into another currency.

I agree, I’m none the wiser after reading most of these threads.

Presume credit union savings would be the same.

Yes, and I’m sorry for asking the same question again. But I just wonder about one slight distinction: the fact that I’m invested in funds. Would this not protect the value of my investment? After all, if I own 5 shares on the day of the switch from the Euro, I will still own 5 shares the next day, and the day after that, and so on, regardless of the value of the “punt nua” versus the euro. Hence, if on day one the punt nua and euro are at parity, and my five shares are worth both 5 euro/5 punt nua, on day 2 the shares will still be worth 5 euro (assuming little market activity of course), but if the punt nua has slipped two-thirds in value, the shares are now worth 15 punt nua.

Or do I have it wrong. Sorry to keep coming back to this!

if stock listed in say a german stock exchange were purchased would this protect against any conversion into a new punt, as they could only be sold on the same exchange and therefore in euro?

Of fecking course.

I believe that in Argentina they seized the assets of the pension funds, sold them for hard currencies , kept the hard currency and compensated the citizen in pesos.

A brief summary of the 2001 crisis

See the entry for dec 6th 2001

I asked this question of a UK guaranteed bank in Ireland and the answer I got is that any funds in Euros with them would be converted to Lenny Pennies so my understanding is that money held in Euros in any institution doing business in Ireland, which would include Rabo, would be converted.

Would someone like to fire off a letter/email to Rabo HQ to clarify their position planning for such an event so we can clarify the matter once and for all.

Argh, it’s been done!


And like anyone sensible they refuse to entertain the speculation because then you have contagion… :angry: