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German banks target worried Greeks in Germany

Greeks worried about a debt restructuring or a euro exit increasingly transfer their money to banks abroad, Bild-Zeitung reports. According to the mass circulation tabloid German banks such a savings bank in Munich have posted signs in their windows advertising in Greek and German that Greek costumers will be advised in Greek. According to the paper €30bn have already been transferred from Greece abroad since the crisis started.



Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Wed May 11th, 2011 at 02:55:36 AM EST
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It appears that the Greek public has realised that a government subject to austerity because its Central Bank will not monetize government fiscal policy is unable (or would be reckless) to make good on banking deposit guarantees.

It also appears the German banks see an opportunity to encourage a run on bank deposits in order to improve their own balance sheet at the expense of the solvency of the Greek banks.

The ECB threatened to blow up the Irish banks in order to pressure Ireland to accept a "rescue". Given that Greece is already in the process of being ECB'd, what is the ECB going to do about the Greek banking system?

Oh, wait, I forgot that the ECB need not care about financial stability or banking supervision, that would be the province of the (recently created) European Financial Stability Board and the National Central Banks, respectively...

I think it's time to institute capital controls for Greece... See Draghi's chances of succeeding Trichet are "getting better by the day" (Eurointelligence, 12.04.2011)

Bundesbank open to capital controls as a last line of defence

Bundesbank board member Andreas Dombret told Börsenzeitung that capital controls can be introduced by countries as "a last line of defence". "If they are used, it should be done temporarily and in a transparent and targeted manner", Dombret said. In combating high inflows of capital countries need to define a hierarchy of things to do. "If after that the inflows persists, capital controls can be considered", Dombret said. Capital controls were up until very recently a taboo and have only been proposed last week by the IMF in a position that was controversial among certain member states.



Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Wed May 11th, 2011 at 04:46:41 AM EST
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