Did you know ? The law was passed in all discretion last August, and will be applied from January 1, 2016. When a bank will be in difficulty, it can take from the accounts of its customers.
The state does not want to be alone anymore to pay …
Until now there was only the “bail-out”, barbaric term that indicated that one could appeal to the public money as it was the case during the subprime crisis.
But the law now allows for an internal bailout operation, called “bail-in,” which advocates tapping into funds that the bank has in its possession.
The first to pay will be the shareholders then the creditors (in other words, we the savers who have funds on our accounts), which will have to cover at least 8% of the losses of the bank before one can appeal to national funds of resolution, abounded by the banking sector.
Let the world crumble, but the bank live!
One can question the why of such a law. The first will is not to widen public deficits further if a bank were to experience severe difficulties, as was the case during the global crisis of 2008.
But beyond that, this system is based on the principle of “too big to fail”. This Anglo-Saxon principle advocates that the loss of a bank would have dramatic consequences such that it must be avoided at all costs, even at the expense of people’s savings.
It’s not the same in all countries!
This law is not a French creation. It was first initiated in Cyprus, then declined to all countries of the European Union. But that’s not the only way. During the crisis of 2008, Iceland had asked for the opinion of his people: the Icelanders had refused to repay the banks at 60% …. And very curiously, the banks managed to find other sources of financing and still managed to get by.
At Good Finance, we think the important thing is to be well informed. Because misinformation makes it possible to claim then that there is only one possible solution, forcing people to go in the most desirable direction … for the one who misinforms. .