European Banking – It Is Getting Scary
Gold Silver Worlds
May 11, 2013
The past week was not only characterized by US equity markets making one all-time high after another. Much less excitement was associated with one frightening message after another related to the state and prospects of the (European) banking sector.
On Thursday, Reuters announced that G7 finance chiefs are coming together to discuss a bank reform push. We do not know the real agenda and underlying motives of the G7 meeting but put in our own simple words: this stinks. Reuters writes: “Some of the world’s most powerful finance chiefs will meet on Friday and Saturday to try to speed up banking and finance reforms, with Cyprus’ near meltdown fresh in their minds.” Today, Saturday May 11th, a reaction appeared on Reuters in which the German finance minister points to Japan being the big risk. Weren’t the talks supposed to be about the banking reform in Europe? Apparently there is something worse going on which is revealed by the title of the piece euro zone crisis no longer main risk to the global economy. So we were correct when we wrote back in February that the currency war had officially started with Japan’s announcements about their monetary stimulus.
Earlier this week, Iris Times wrote that Ireland which has the presidency of the European Council, will propose the ‘bail-in’ of large depositors in case of European bank collapses. “Discussions on the controversial bank resolution regime, which is likely to see savers with deposits over €100,000 “bailed in” as part of future bank wind-downs, are due to intensify this week in Brussels, ahead of Tuesday’s meeting, which will be chaired by Minister for Finance.”