Europian Union countries are exploring the persuasion of imposing an EU-wide concern human relationship freeze mensurate to foreclose potential banking enterprise runs. Could Bitcoin furnish a feasible option to secure depositors' funds?
Preventing the Chaos
European Union states possess got proposed a new measure which would effectively permit them to freeze banking enterprise accounts before a banking enterprise run takes place. The mensurate was planned before this yr inwards gild to foreclose banking enterprise runs similar to that of Banco Popular final month. The proposal wants to foreclose depositors from pushing over the border banks that are already failing or volition probable fail.
According to European Union rules, each depositor that has less than 100,000 euros deposited inwards a banking enterprise concern human relationship is insured from a banking enterprise run. But nether the novel plan, a potential banking enterprise run could strength the supervisors to freeze banking enterprise accounts of all depositors, too therefore freeze withdraws from banking enterprise accounts.
Charlie Bannister, of the Association for Financial Markets inwards Europe (AFME), noted following:
We strongly believe that this would incentivize depositors to run from a banking enterprise at an early on stage,
Countries that already possess got a moratorium on banking enterprise payouts, similar Germany, possess got strongly supported this novel plan. According to a somebody familiar alongside German linguistic communication government's thinking:
The wishing is to foreclose a banking enterprise run, too then that when a banking enterprise is inwards a critical province of affairs it is non pushed over the edge,
The Bitcoin Effect
Back inwards 2013, Cyprus' banking crisis was a hair's breadth away from a full economical collapse. Cypriot banks were desperate for a bailout from the EU too International Monetary Fund too many concern human relationship holders feared that their deposits would vanish. This fearfulness caused a classic banking enterprise run too people were rushing to banks too ATMs inwards gild to withdraw every bit much money every bit they could.
Inevitably, cash became scarce too the ATMs stopped working. Many saw Bitcoin every bit the final selection to secure their funds. The crazy need from Republic of Cyprus for Bitcoin caused the digital currency's value to rising from $47 to $88 – an growth of over 88 percent! With the EU's novel proposal, many believe that Bitcoin tin flame 1 time over again last a prophylactic means for depositors to secure their funds from a banking enterprise run.
What are your thoughts on this novel proposal? Do y'all intend that it volition foreclose banking enterprise runs? Will Bitcoin be able to salve depositors over again from a banking enterprise run? Let us know inwards the comments below!
Image courtesy of Pexels
The postal service EU Proposes Account Freezes to Prevent Bank Runs; Bitcoin to the Rescue? appeared kickoff on Bitcoinist.com.
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