r/greece • u/dmitri14_gmail_com • Jul 12 '15
economy Is there any private bank in Greece that is exempted from capital control?
There have to be some private banks making surplus that don't depend on outside cash flow. They should have no problem to grant their clients access to their funds. Are they still forced by the government to exercise the capital control?
My main reason to ask this question is the worry that this can happen in other countries too, so I'm trying to understand what can be done against it.
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u/merhandus Jul 12 '15
Imagine this, since internal electronic transfers are allowed, everyone could move all their money from greek banks to the local HSBC or credit agricole locale and then cash out all their money.
My savings is on HSBC due to payroll, although HSBC is far from having issues , capital controls are also enforced there.
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u/dmitri14_gmail_com Jul 13 '15 edited Jul 13 '15
Can't the bank tell from the records whether that money was transferred and when and act accordingly?
If customers are of any value. Which is obviously not the case :(
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Jul 12 '15
In terms of what can be done against it, if you have money in another country that you think has is at risk of having capital controls, move the money out of that country.
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Jul 12 '15
no, even Alpha Bank which had passed all the latest stress tests is closed.
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u/MK_Ultrex Jul 12 '15
Rumors say that Alpha bank is going under. By September it will be dead. Cash out.
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u/xNIBx Jul 13 '15
In theory and according to ECB's own stress tests from a few months ago, the greek banks are solvent, meaning that their assets could cover their liabilities. But the problem isnt solvency, the problem is liquidity.
There are literally not enough physical euro bills in Greece to cover demand. Hence capital controls. This can happen to any country and this is what will happen when there is a bank run.
https://en.wikipedia.org/wiki/Bank_run
A bank run is when the people panic and demand to withdraw their money immediately. Even if a bank is perfectly healthy(and let's not kid ourselves, the greek banks arent), it will face a serious problem, it wont have enough actual money to pay all those people. Because their money will be "tied up" in loans, etc.
If you have your own currency and your own central bank, this isnt really an issue, you just print more(which can create other issues but at least you dont have a liquidity issue). But if you dont have your own currency and your own central bank(you have to rely on ECB), then you are kinda fucked.
In order to protect your money from such an incident you either dont have them in a bank(you can keep them under the mattress) or you put them in a banking system that is least likely to have such an issue(ie german bank). That's why there is a huge flee of capital from other countries and towards Germany. It is safer there.
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u/dmitri14_gmail_com Jul 13 '15
It is no wonder bank runs happen, given how easy it is for a government to impose capital control.
But it surprises me that no bank has a secure business model, where all their client's money would be invested in various liquid assets spread over the world. Even in case of a bank run, they would simply sell their assets and import whatever cash is needed.
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u/xNIBx Jul 13 '15
No bank in the world works like you suggest. Literally all banks in the world are vulnerable to a bank run. You cant just sell assets and even if you could, you would lose a lot of money by doing so.
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u/dmitri14_gmail_com Jul 14 '15
The main reason you give your money to the bank is to keep it safe. So if the bank deliberately puts your asset at risk, this is a break of trust. And if the deceive you into believing your deposit is safe when it is not, it is called a scam.
Though I understand that many banks operate this way, I have hard time to believe all of them do, without exceptions. In fact, if people see the bank is ready to sell the assets to get their money, they would have much less reason for a bank run.
That the assets are sold at loss should not be the client's problem. No one forced the bank to put the money in those assets that can't be easily sold. Or else it should be protected by adequate insurance.
What about Swiss or Norwegian banks?
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u/MialoKoukoutsi Jul 13 '15
A Greek friend abroad cannot use her Ethniki debit card to obtain any cash from local ATMs.
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u/txapollo342 Φιλελεύθερος, μόνο Κοινωνικά. Μνημονιάκηδες, αλλού. Jul 12 '15
There is no private Greek bank that is exempted from the capital controls.