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deposits in irish banks

  • 18-02-2009 1:24pm
    #1
    betonit
    Registered Users, Registered Users 2 Posts: 526 ✭✭✭


    at would point would deposits in irish banks be at risks. Do we need irish banks as there are so many uk banks here nad save the 8bn


Comments

  • #2
    Time Magazine
    Registered Users, Registered Users 2 Posts: 8,452 ✭✭✭Time Magazine


    betonit wrote: »
    At what point would deposits in Irish banks be at risk?
    If the Irish state became bankrupt and the IMF stepped in, then the State guarantee would probably no longer apply. In that case there's a chance that depositors would lose some of their deposits, thought it's quite possible that all would still be paid back anyway.


  • #3
    [Deleted User]
    Posts: 0 ✭ [Deleted User]


    The Economist wrote: »
    quite possible that all would still be paid back anyway.

    Any idea on time frame should that occur? Any historical experience on this?


  • #4
    Time Magazine
    Registered Users, Registered Users 2 Posts: 8,452 ✭✭✭Time Magazine


    Deleted User wrote: »
    Any idea on time frame should that occur? Any historical experience on this?

    I'm not a monetary economist at all, I'm into abstract mathematical models and the like, so I don't know a whole lot more about the IMF than what I've read on their website and what Joe Stiglitz told me.

    I don't think the IMF have ever stepped into a country as rich as Ireland before though, so it would be a precedent. This is why I'd consider it reasonably plausible that even if the State were to become bankrupt, depositors might not lose out. There would almost certainly be a lot of pain as our fiscal policy would be handed over to Washington, though.

    As I said though, this isn't my area of expertise so I'm merely speculating. And even at that, it's speculating on something that's unlikely to happen. I don't imagine the public sector unions et al are that stupid as to force the IMF to come in.


  • #5
    gurramok
    Closed Accounts Posts: 13,992 ✭✭✭✭gurramok


    Depends also on the value of the 'rescue' fund. Irish and foreign depositors have tens of billions in the banks, would the IMF/whichever organisation have that amount of money to pay?


  • #6
    MG
    Closed Accounts Posts: 823 ✭✭✭MG


    There is a moral hazard issue too. Just speculating but the IMF might be reluctant to punish the sensible folks who saved. Allowing deposits to be lost would crush confidence in the banking system but would be counterproductive to the IMF.


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  • #7
    Gekko
    Registered Users, Registered Users 2 Posts: 1,189 ✭✭✭Gekko


    The Economist wrote: »
    I don't think the IMF have ever stepped into a country as rich as Ireland before though, so it would be a precedent.

    Unless I'm mistaken, the IMF were partly responsible for Britain turning around in the 80s. As I understand it some of their people were essentially telling Thatcher what to do.


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