# Hypothetical Question if Ireland defaults



## tomfox3 (11 May 2011)

Greetings all,
I am a new user and had a hypothetical question. I know nobody can predict the future, and I know any opinions are just opinions and not advice etc etc, but its just a hypothetical. 

If Joe Soap had 100k in Ulsterbank on a demand deposit account and Ireland decides (or is forced) to default on the bailout..

1. Would Joes money be frozen and seized as a state asset? Or would it be unaffected as its in a private non state owned bank. Didn't depositors in Argentina have their private accounts frozen? and/or seized?

2. If Ireland left the Euro (is that even possible?) would Euros owned by all Irish citizens in banks operating in IReland be suddenly converted to punt?

Ok I know nobody can definitively answer these Hypothetical but people like Joe are probably thrawling through the posts and cannot find the above in plain speak (as he is a total noob). (plus the media is so unreliable and seems to get off on scare mongering and doom selling)


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## Kev (11 May 2011)

I was under the impression that Ulster Bank came under the jurisdiction of the UK


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## jonocon (11 May 2011)

i wish I knew, as my name is soap but you can call me Joe


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## Gervan (11 May 2011)

1. I would imagine that any bank operating in the State would have to obey Irish law, so if the law legalises confiscation, all banks here would be affected.
2. It wouldn't make any sense for Ireland to leave the euro, but IF it did, surely all banks doing business here would have to operate in the legal tender of Ireland.

If these financial possibilities seem likely to you, you should arrange your financial matters so that you are comfortable with whatever risks you perceive. Whatever you decide will have a cost, whether it is putting euro into a bank abroad with a much lower interest rate, or transferring euro into a foreign currency in an Irish or offshore account, with possible currency exchange rate losses.


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## Chris (12 May 2011)

Here is my opinion.
1) Yes, there would be a limit imposed on withdrawals as nobody in their right mind would want to have a devalued new currency
2) Yes, all currency would have to be automatically converted unless the new currency was suddenly more attractive than the Euro. But that would not be the goal of the exercise of leaving the Euro.


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## bryanod (12 May 2011)

3) All resdents accounts within Europe (UK/Swiss etc) could also be revalued/taxed so moving and expsouring yourself to the much more realistic and immediate currency risk may not be the right choice.


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## barrydn (12 May 2011)

As far as I am aware, in that instance, deposits would be converted from Euro to the new currency, initially at 1:1 and any devaluation would happen naturally as the new currency floats on the open market. So the exchange rate of the new currency would effect the actual value of your deposit. In which direction the valuation might go....i'll let you decide.


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## julius128 (12 May 2011)

barrydn said:


> As far as I am aware, in that instance, deposits would be converted from Euro to the new currency, initially at 1:1 and any devaluation would happen naturally as the new currency floats on the open market. So the exchange rate of the new currency would effect the actual value of your deposit. In which direction the valuation might go....i'll let you decide.



I believe new currency will be devalued over the night as soon as changed as the whole idea of exiting Euro is value of Euro which is too high for Irish economy.


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## caoimhe (12 May 2011)

*bank notes*

I have been following all of the 'deposits' threads closely on AAM as i am terrified of what could happen to my savings. Despite all the warnings, i have not yet moved any of my savings outside of Ireland as none of the options seem particularly satisfactory. Although safety is the primary concern, i don't like the thought of very low interest rates as inflation seems to be on the increase. Now people even seem to be suggesting that even if i were to move my savings outside the state, that the government may still be able to access it in the form of an emergency tax if the account was registered to an irish address. Currently, my savings are mostly split between Nationwide UK and Ulster Bank. I am doing okay financially at the moment but i do envisage some much leaner times ahead and am likely to need my savings in the next few years. In the event of a worst-case scenario (i don't think it will come to it but best to have a back-up plan just in case), i was thinking of stashing a fairly modest amount of hard cash at home (about €2,000). I'm aware of the related risks but would be happy with that amount. 
My query is, if Ireland was to leave the Euro, and the money in bank accounts was to be converted to the punt nua and devalued, how would existing notes be affected? Should i ensure that any euro notes stashed are German (i.e. that the serial code begins with an X rather than a T)? In such a situation, would all citizens of Europe need to look at their notes to determine what country they originated in, and if they were stuck with a bum irish note, have to accept a lower amount for it?
Any views would be greatly appreciated.
Caoimhe


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## barrydn (12 May 2011)

I think there is some 800 billion worth of Euro notes in circulation presently and since there is free trade and passage around Europe, the notes you have could well have been printed in any country. Right now, all notes in my pocket are different .....likewise, there are plenty of Irish notes floating around Europe so it would be unlikely if not impossible to devalue specific Euro notes. This is just my opinion.


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## Gervan (12 May 2011)

The more I think about Ireland leaving the euro the less likely it seems. Say they did re-introduce the punt, which immediately fell to 3 to the euro. So a German tourist comes in with X euro, changes into 3X punt. If Caoimhe has €2000 euro in his house he could do the same. And if he's not allowed to change the euro here, because he has an Irish passport, he could drive across the border and change the euro there. It just doesn't seem a workable idea.


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## Kev (12 May 2011)

I feel that if there was a change of currency it would be changed to sterling again.


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## tomfox3 (13 May 2011)

Thanks for all the opinions everyone. Certainly some good food for thought there. 
My own opinion is that we are too tied to the Euro to be discarded or released from it. The Irish govt. certainly has no intention of forcing that route, and the ECB won't want it to happen either.
I think I am more concerned about the possibility of confiscation in the form of an "asset tax" on deposits / savings and/or the partial freezing (limits on amount of movement) of deposit accounts here to prevent a complete drain on bank liquidity. 
I have the option to move money to another Euro country (registered address there etc). 
Will wait and see if any more opinions emerge before making any decisions.
Cheers


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