Sunday , 14 April 2024

Europe Introduced Bank “Bail-In” System Jan.1st – Can the U.S. Be Far Behind? (+2K Views)

If you have a bank account anywhere in Europe, you need to read this bankingarticle.  If you have a bank account in the U.S. you need to read this article too! Here’s why.

By Michael Snyder (

On January 1st, 2016, a new bail-in system will go into effect for all European banks.  This new system is based on the Cyprus bank bail-ins that we witnessed a few years ago.  If you will remember, money was grabbed from anyone that had more than 100,000 euros in their bank accounts in order to bail out the banks.  Now the exact same principles that were used in Cyprus are going to apply to all of Europe. With the entire global financial system teetering on the brink of chaos, that is not good news for those that have large amounts of money stashed in shaky European banks.

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This new bail-in system…[makes provisions for any occasion] when a bank in Europe fails…[by permitting the bank to go] after private bank accounts once the shareholders and bond holders have been wiped out. That means that, if you have more than 100,000 euros in a European bank right now, you are potentially on the hook when that bank goes under. As we have seen in the past, however, these rules can change overnight in the midst of a major crisis so, while they may be promising that those with under 100,000 euros will be safe right now, that doesn’t necessarily mean that it will always be the case.

It is also important to note that there has been a really big hurry to get all of this in place by January 1 [so it begs the question as to] why was the European Commission in such a rush? Is there some particular reason why January 1 is so important? This is something that I will be watching.

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Meanwhile, there have been major changes in the U.S. as well.  The Federal Reserve recently adopted a new rule that limits what it can do to bail out the “too big to fail” banks…adopting a new rule Monday that limits its ability to lend emergency money to banks. If the Federal Reserve does not bail out these big financial institutions during the next crisis, what is going to happen? Will we see European-style “bail-ins” when large banks start failing and exactly what would such a “bail-in” look like?

If you have money at a bank that goes under, that bank will still be obligated to pay you back, but it may not be able to do so.  This is where the FDIC comes in.  The FDIC supposedly guarantees the safety of deposits in member banks, but at any given time it only has a very, very small amount of money on hand.

If some major crisis comes along that causes banks all over the United States to start falling like dominoes, the FDIC will be in panic mode.  During such a scenario, the FDIC would be forced to ask Congress for a massive amount of money, and since we already run a giant deficit every year the government would have to borrow whatever funds would be required.

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Personally, I find it very interesting that we have seen major rule changes in Europe and at the Federal Reserve just as we are entering a new global financial crisis. Do they know something that the rest of us do not?

Be very careful with your money, because I am convinced that “bank bail-ins” will soon be making front page headlines all over the world.

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The original article was written by Michael Snyder ( and is presented here by the editorial team of (Your Key to Making Money!) and the FREE Market Intelligence Report newsletter (see sample here sign up in top right corner) in a slightly edited ([ ]) and abridged (…) format to provide a fast and easy read.]

Related Article from the munKNEE Vault:

Canada & the European Union Are Proposing Cyprus-style “Bail-ins” for Their Too-Big-To-Fail Banks!

The politicians of the western world are coming after your bank accounts. Cyprus-style “bail-ins…for systemically important banks” are actually proposed on pages 144 and 145 of “Economic Action Plan 2013” in the new Canadian government budget and it is being reported that the European Parliament will soon be voting on a law which would require that large banks be “bailed in” when they fail. …I can’t even begin to describe how serious all of this is. So exactly what in the world is going on here? Words: 1075