|Europe on Brink of Catastrophic Bank Run|
|by Tom McGregor||Mon, Jul 9, 2012, 09:16 PM|
Europe appears to be on the verge of major bank run and EU officials are dragging their heels on reaching a solution.
According to Fortune Magazine, “Europe is starting to look more and more like the U.S. as it headed for the cliff in the fall of 2008. The continent’s banking system is fragile and over-leveraged. Making a scary situation even scarier is the lack of a cetral credible authority to protect European bank depositors against losses should their banks fail. While Europe has not experienced any bank runs – yet – banks in Greece, Spain and to a lesser extent, Italy have experienced bank ‘jogs,’ in which depositors have withdrawn significant amounts of cash. Customers in those troubled nations are protected by national deposit insurance systems, but they are understandably skittish, since those systems are only as good as the banks and governments backing them. Greek depositors in particular fear that if their country ends up exiting the eurozone, they may wake up one morning to find their euro deposits converted into drachmas at only a fraction of their previous value.”
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