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About LinkBacksIf our banking system runs on the fractional reserve system why does AIB bank need to raise its mortgage rate?
If our banking system runs on the fractional reserve system why does AIB bank need to raise its mortgage rate?
Fianna Fail will allow the Irish People, to me milked like Milch Cows, by the CIF through high house prices, rents, and land prices, at the expense of competitiveness,and quality of life. FF+CIF=1
AIB borrows money from the ECB at the ECB rate and lends it to you at their rate. Their rate is higher, so they make a profit (e.g. they pay EUR4.50 per EUR 100 borrowed from the ECB and get EUR 5.25 per EUR 100 from the borrower). The rest of the interest (EUR4.50) goes to the ECB.
My understanding is that the ECB doesn't actually get to use that money though, so in effect it is taken out of the economy (unless they then lend out more money). They might use some of it to cover costs.
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I don't think you are right.
Aib take money on deposit, they create several times that amount, out of thin air using my property as security, for literally creating money and lend it to me.
THE ECB lend money to a bank if they get into trouble.
How could the ECB have a cost base eight times greater than AIB ie AIB charge 4.5% and ECB charge 4% in your scenario.
What do ECB do with the interest on their money?
Fianna Fail will allow the Irish People, to me milked like Milch Cows, by the CIF through high house prices, rents, and land prices, at the expense of competitiveness,and quality of life. FF+CIF=1
If you are talking about the rate AIB is raising its rates on top of the ECB rate this is to make up for a fall off in profits from new lending and an attempt to shore up their liquidity rate. This is has already happened with other lenders.Originally Posted by mairteenpak
Simply put Irish banks have been sailing close to the wind relying on a strong residential housing market and low defaults.
With both of these situations now changing they must shore up their balance sheet somehow.
The problem with socialism is that eventually you run out of other people's money.
Can their bad debts and operating costs be exceeding their interest income? Or is it a matter of the value of the security for loans diminishing in value?
Fianna Fail will allow the Irish People, to me milked like Milch Cows, by the CIF through high house prices, rents, and land prices, at the expense of competitiveness,and quality of life. FF+CIF=1
What is the fractional reserve of Irish banks?
How many Irish institutions lend on a fractional reserve system and who are they?
Fianna Fail will allow the Irish People, to me milked like Milch Cows, by the CIF through high house prices, rents, and land prices, at the expense of competitiveness,and quality of life. FF+CIF=1
just follow the trail
viewtopic.php?f=79&t=37255
and you should get there in the end.
It would help anyone to do a web search on a mid 90s video "The Money Masters" which looks at the history of the establishment of the US Federal Reserve. It's a good start and the majority with degrees in economics etc wouldn't know anything about it.
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