EU Proposal Would Allow Banks to Suspend Cash Withdraws
An EU proposal underscores just how much control governments have over your money.
According to a document reviewed by Reuters, EU member states are considering a proposal that would allow them to temporarily stop people from withdrawing their own money from their accounts. The policy is intended to help prevent bank runs.
The move is aimed at helping rescue lenders that are deemed failing or likely to fail, but critics say it could hit confidence and might even hasten withdrawals at the first rumors of a bank being in trouble. The proposal, which has been in the works since the beginning of this year, comes less than two months after a run on deposits at Banco Popular contributed to the collapse of the Spanish lender.”
Under the plan, banks would be able to suspend payouts for five business days. They could extend the suspension up to 20 days “in exceptional circumstances.”
The EU working paper said giving supervisors the power to temporarily block withdraws was “a feasible option.” Some countries in the EU, including Germany, already allow a moratorium on bank payouts. These countries support the move to make it an EU-wide policy.
The desire is to prevent a bank run, so that when a bank is in a critical situation it is not pushed over the edge,” a person familiar with German government’s thinking said.
Withdraw limits, and even complete shutdowns of the banking system, aren’t merely theoretical discussions. During the Greek financial crisis, people faced withdraw limits and currency shortages. The entire banking system shut down for three weeks. Even when banks reopened, depositors faced withdraw limits of 420 euros a week. As a result, a robust barter economy quickly developed out of sheer necessity.
Imagine if you couldn’t access your own money for two or three weeks? What would you do? Money in the bank means nothing when the government restricts your access to cash, or even seizes your deposits. But you can protect your wealth in better forms than fiat currency tucked away in a government controlled bank.
Gold and silver offer protection against government policies that could conceivably tie up your money for weeks. If you have precious metals, you don’t have to worry about a bank, or some crazy government policy, making it impossible for you to obtain the things you need on a daily basis. Gold and silver are liquid and their value is recognized around the world. Silver is also a perfect medium for barter transactions. You can even buy gold in barterable forms.
When you buy gold and silver, you take away government power over your life.
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