Business Insider Italia – 11:18 AM – 17 October 2018We’re now two months into the bank holiday season and the situation is far from rosy.
With banks still struggling to recover from the Great Recession and the euro zone’s banking system in crisis, we’ve seen some of the biggest shocks to banks in history, with some banks in trouble and others recovering from them.
The Greek banking crisis has also seen a significant increase in the number of negative interest rates in place in Europe.
These are rates at which banks have to pay customers for deposits, with the average rate in Greece being -0.35%, according to data from Capital Economics.
The German banking crisis was even worse, with negative interest rate rates of up to -0!7% – or 3% for a long time, according to Capital Economics data.
The European Central Bank’s negative rate rate was -0,4% last week, and was recently cut in half.
With the Greek banking system still in crisis mode, and the Eurozone’s banking sector in crisis form, it’s no wonder the financial industry is in the midst of a crisis of confidence, with banks and bond markets in crisis.
In the UK, for example, the British Bankers’ Association is predicting that the Bank of England’s monetary policy committee will have to cut interest rates to -1% for the next two months, and a further cut could be on the cards this week.
In the US, the Federal Reserve and the Treasury have cut interest rate targets for 2017 to -2%, -4%, and -3% respectively, with no indication as to when the next rate cut will be announced.
While the risks are very real, what are the risks that the banks are not going to recover or that this is a banking crisis in the making?
The risk of contagion, as we would call it, has been a major concern of the banks and investors for some time now.
We have seen several cases of this in the financial sector, with investors having lost a lot of money in the run up to the Great Depression, when banks in many countries were struggling to get back on their feet.
In a crisis like this, it is important that banks can withstand the shock of a cut in their capital and maintain a solid financial position.
The problem is that, as banks are now in crisis with negative rates and liquidity, it would not be possible to maintain a safe position.
The risk is that the economic consequences of a bank being unable to continue operating will be even worse than those of a banking collapse, and that the financial institutions themselves may be unable to repay the creditors.
This would make it very difficult for them to continue running.
This is precisely what has happened in Greece, where banks are being forced to close and the country is in a state of financial panic, with bond yields hitting record highs, with people running out of money.
The Greek government has announced that it will run out of cash by 20 November, with interest rates expected to increase to 3.8%.
The Greek banks have now already declared bankruptcy, with a default on the government’s debt set to happen at some point next week, meaning the country will run a liquidity crunch and the banks could run out to run.
The economic impact of a default is even greater, as a bank could be left without the cash it needs to continue operations.
The banks would then have to shut down, which could cause further hardship to the people who rely on them.
We also have concerns that this could trigger another banking crisis.
If the Greek banks fail, then the banks of other countries that rely on Greek banks could also go bust.
For example, if the Greek government decides to take out a rescue loan to keep the Greek financial system afloat, the banks in the eurozone could face a similar fate, meaning a further debt default.
While it’s not clear how much capital banks would need to run to survive in a financial crisis, the possibility of default is not insignificant, as it would be in the banks own interest to avoid running out cash.
There are also a number of issues in the banking system that need to be addressed.
Banks are operating at very low levels of capital, with only 6% of all banks having capital of $2bn or more.
In comparison, the world’s biggest financial institution, JP Morgan, has more than 50% of its assets in cash, and is expected to have a cash balance of $4.7bn.
The Bank of Japan and the European Central Agency are also under huge pressure to meet capital requirements, with both governments needing to increase their lending rates, as the Japanese economy is in recession and the ECB is already printing money.
All of these things add up to a risk that the Greek bank system could run dry.
If a bank is unable to run out its capital and survive, the bank could also lose all of its credit