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Thread: Are Our Savings Safe

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    Default Are Our Savings Safe

    Hi,

    Do you think our deposit savings are safe? Simple question and it goes to the heart of whether this state can afford the deposit gurantee if it ever needed to be called in. Say for instance the IMF had mto come in here, which at this stage is not beyond the realms of possibilities. Since our banks are costing so much, is it inconceivable that the IMF, as part of its set of conditions, required the banks to write off X% of deposits held. This would then surely require the bank guarantee to kick in. Does the government have the resources to make good those guarantees? I suspect not.

    What do you think?

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    Politics.ie Member HarshBuzz's Avatar
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    read this

    and, no, I don't think our savings are 'safe'

    in increasing order of safety:

    1. Irish bank deposits
    2. Other bank deposits domiciled in Ireland (e.g. rabodirect)
    3. EUR bank deposits in core Eurozone states
    4. Gold

    personally, I'm in (3). I've moved all my cash out of Irish-domiciled accounts.
    “'retail deposit flight, I don't see that as a great danger. Ireland is an island” - Brian Lenihan - to hundreds of international investors

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    In a word, no.

    The great and the good have all moved their deposits offshore in the past year (see bank recapitalisations). If and when the smelly stuff hits the moving ventilation machine, the not so great and good might be left with a problem.

    There is also the slight concern that the euro could break up/euro 2 be announced for the PIIGS or Ireland kicked out of the euro. Any of these happen and your nice euro deposits will be reclassified in punt nua, euro 2's or punt nua.
    We have turned the corner.I commend this Budget to the House. Brian Lenihan, 9 December 2009

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    Politics.ie Member Interista's Avatar
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    If I'm not mistaken, in one of the best known examples of recent IMF intervention - in Argentina after the crash - deposits were safe. They did lose value because the previous dollar peg was dropped and the Argentine currency plummetted, but afaik they were not lost, though strict withdrawal limits were imposed.

    Another point here is that it's unlikely the ECB would allow the depositors of a Eurozone country to lose out in this manner. THis isn't due to altruism, but because they know that if Irish savers were to lose their savings, there would be an immediate run on the banks in the other PIIGS. Ireland is small enough that the ECB could step in to guarantee the savings if the worst came to the worst.

    Or perhaps this is all wishful thinking from someone who has quite a lot of dough in Irish banks...

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    Politics.ie Member HarshBuzz's Avatar
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    Quote Originally Posted by Interista View Post
    Or perhaps this is all wishful thinking from someone who has quite a lot of dough in Irish banks...
    confirmation bias

    those Argies you speak of lost almost everything when the peg was removed
    “'retail deposit flight, I don't see that as a great danger. Ireland is an island” - Brian Lenihan - to hundreds of international investors

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    Politics.ie Member Interista's Avatar
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    those Argies you speak of lost almost everything when the peg was removed
    Yes, but such a situation would only happen here if Ireland withdrew from or were forced out of the Euro. Despite what some people say, I can't see this happening in the near future.

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    Ulster Bank is safe enough, surely? Is it easy to get a EURO account in another EU state?

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    Politics.ie Member Interista's Avatar
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    Quote Originally Posted by PrinceMax View Post
    Ulster Bank is safe enough, surely? Is it easy to get a EURO account in another EU state?
    I thought Ulster Bank in the RofI was registered as an Irish bank?

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    Quote Originally Posted by DCon View Post
    In a word, no.

    The great and the good have all moved their deposits offshore in the past year (see bank recapitalisations). If and when the smelly stuff hits the moving ventilation machine, the not so great and good might be left with a problem.

    There is also the slight concern that the euro could break up/euro 2 be announced for the PIIGS or Ireland kicked out of the euro. Any of these happen and your nice euro deposits will be reclassified in punt nua, euro 2's or punt nua.
    Well, on a selfish note (which drove the post in the first place) I have quite a few sheckles I'm glad to say, squirelled away, however, my debts (mortgage) exceed my savings. So if the worst came to the worst, being denominated in a second class currency, I wouldn't lose anything, would I, since my mortgage would be denominated in the second class currency as well.

    Is that thinking correct?

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    Politics.ie Member Squire Allworthy's Avatar
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    Quote Originally Posted by HarshBuzz View Post
    confirmation bias

    those Argies you speak of lost almost everything when the peg was removed
    The currency was originally pegged to the dollar. There was a run on the banks so the government basically froze all accounts for 12 months. Then there was "peso-ification". All bank accounts denominated in dollars were converted to pesos at the official rate. The peso fell in value to about 4 to the dollar.

    So a lot of people lost the bulk of their savings.

    Why place trust in any government.

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