# Money on Deposit Safety of the Euro



## TLC (22 Nov 2010)

A simple question - maybe not a simple answer - we have approx €150,000 in savings money from an inheritance received a couple of years ago & savings we have made over the years. If the worst comes to the worst & the problems move from Ireland to Portugal to Spain, could the Euro go bust ( I know my terminolgy isn't the proper financial wording & I apologise for that) will all our savings - not just ours but everybodies - be wiped out?  Should we consider moving the bulk of it into the US dollar - can we even do that?  I'm not to concerned about interest rates at the moment - we would just like some reassurance that it would be safe. It is our nest egg for retirement.


----------



## Godfather (22 Nov 2010)

Anything can happen, even that China can ask for the money back for the US bonds they subscribed thus bringing US to the verge of collapse...

The question has to be: where are you planning to retire? Once you know the answer why not keeping the money there so that you'll follow the destiny of the other co-citizens? I'm acting on the basis of this question as I don't see too many certainties...


----------



## Troy McClure (22 Nov 2010)

If the Euro goes you wont lose your savings as there are still guarantees. The problem is if we revert to an Irish punt we will have to devalue overnight and thus your money will be worth less.


----------



## tommy78 (22 Nov 2010)

So how do we protect our savings against devaluation if we leave the Euro ?


----------



## Delboy (22 Nov 2010)

tommy78 said:


> So how do we protect our savings against devaluation if we leave the Euro ?



slightly diffferent question, but a different angle....
If your deposits are with say, rabodirect.ie, and we switch to the punt....does your savings switch to the punt also or stay in euros? i.e. are deposits with Rabo and Northern Rock Ireland held in Ireland or in their mother countries?


----------



## tommy78 (22 Nov 2010)

> If your deposits are with say, rabodirect.ie, and we switch to the punt....does your savings switch to the punt also or stay in euros?




As far as I am aware they switch to the Punt so your savings get devalued as well.


----------



## Bcommercial (23 Nov 2010)

We've always been subject to the vagaries of the currency markets and exchange rates, but especially since the onset of the current global financial crises those with savings have all been heavily involved in currency speculation, however unwillingly and unwittingly. This is a risky game where savings can get seriously decimated and we should all be fully aware just how exactly we are involved.

If Ireland at any time in the future for whatever reason should have to default on it's guarantees, and/or, revert back to a much devalued punt nua, all savings covered by the Irish bank guarantee are at risk in scenario 1, and all savings held within the state are at risk in scenario 2.

Should we be prudent with our life's savings and move them offshore, we would still all be speculating that the euro will hold it's value viv a vis other currencies and not slide into some abyss before disintegrating altogether perhaps. Recent euro instability caused by just our own little state and the well-acknowledged fundamental structural imbalances of "one size fits all", might not auger well for the single currency going forward, at least in it's present form. So, should we also have some of our savings outside the euro as well as outside the state? ...a question well worth speculating on!


----------



## Willows (23 Nov 2010)

Can someone please let me know how our savings would be devalued? Even if we had to go back to our own currency and a euro was worth, say, 5 "punt nua" surely for every euro I have in saving they would have to give me 5 punt nua. I should still have the same euro equivelent when the currency comes into effect. I know after this we run the risk of exchange differences, but the immediate effect should be the same. Am I missing something here?


----------



## farmerette (23 Nov 2010)

Willows said:


> Can someone please let me know how our savings would be devalued? Even if we had to go back to our own currency and a euro was worth, say, 5 "punt nua" surely for every euro I have in saving they would have to give me 5 punt nua. I should still have the same euro equivelent when the currency comes into effect. I know after this we run the risk of exchange differences, but the immediate effect should be the same. Am I missing something here?


 
i assume in those circumstances , anyone who had ammassed a large amount of cash ( euro ) would be in a possition to take advantage of our new currency although euro,s in ireland might have an identity unique to this country so unless you had german notes , your euro cash would become punt nua cash

im thinking too deeply here


----------



## Delboy (23 Nov 2010)

Willows said:


> Can someone please let me know how our savings would be devalued? Even if we had to go back to our own currency and a euro was worth, say, 5 "punt nua" surely for every euro I have in saving they would have to give me 5 punt nua. I should still have the same euro equivelent when the currency comes into effect. I know after this we run the risk of exchange differences, but the immediate effect should be the same. Am I missing something here?



your punt nua's would be worth a lot less v's the euro in short time as the Irish Govt would seek to devalue the punt nua to make Ireland competitive. Also given our current situation, there'd be very few takers for holding reserves of irish currency therefore more downward pressure would be applied.
So 5 punt nua's might equal 1 euro on day 1, but a it would'nt stay like that for long...at least not until we get ourselves out of this mess in the medium term


----------



## DocOc (23 Nov 2010)

If Irish Euros became Punt Nua's and your savings became Punt Nua's would it follow that your debt / mortgage would become Punt Nuas also and no longer be in Euros?

On another point would it be madneess for the Irish state to come out of the Euro and devalue the Punt Nua given that we have massive debt in Euros which would only increase if the Punt Nua was devalued? Perhaps the only way this could happen is in the event of ireland defaulting?


----------



## Delboy (23 Nov 2010)

DocOc said:


> On another point would it be madneess for the Irish state to come out of the Euro and devalue the Punt Nua given that we have massive debt in Euros which would only increase if the Punt Nua was devalued? Perhaps the only way this could happen is in the event of ireland defaulting?



i don't think we'll leave the euro....we could be kicked out though especially with the carry on of the Greens and 2 Independent muppets yesterday.
If this budget is'nt passd or we postpone it, that could be all the other euro countries need to walk away


----------



## galleryman (23 Nov 2010)

the way I see it, If we secure the rescue package, our participation in the Euro is locked in for the reason stated above by DocOc, our debts would all be in Euro. Europe won't kick us out if they ever want to get the €90Bn bailout package back. We then need to claw ourselves back to some sort of ecomonic strength over a period of 80's like cutbacks, emigration and tax hikes.

If we screw up this rescue package, then our only option is default, decouple from Euro, and devalue! Our reputation (what's left of it) will be in tatters, Our only hope will be to do whatever it takes to keep the multinationls we already have for employment and to entice new ones over here to employ our population and use the skills we have sitting on the dole. (We will probably need a new 5% Corporate Tax Rate and 1% social contribution for multinationals. Why not as we will no longer be friends of Europe after defaulting on their central bank and other member state banks ) AND then we manufacture and export the hell out of anything we can to get any money into Ireland.


----------



## Tuttlinghorn (23 Nov 2010)

don't kid yourself galleryman. we are in the Euro - thats why the corp tax rate is so attractive. it's not the cailins at the crossroads.


----------



## galleryman (23 Nov 2010)

Tuttlinghorn said:


> don't kid yourself galleryman. we are in the Euro - thats why the corp tax rate is so attractive. it's not the cailins at the crossroads.


 



I know we are in the Euro.....for now,  and provided we secure a bailout we will probably remain there.
The corporate tax rate is not low because we are in the Euro. It was low before we joined the single currency and it is low because we are a small open economy on the periphery of Europe.  We are the first port of call between Europe and the US we need to attract multinational companies to invest here and to employ people here. 

sorry but I don't get the cailins at the crossroads reference.


----------



## Pique318 (23 Nov 2010)

galleryman said:


> Europe won't kick us out if they ever want to get the €90Bn bailout package back.



90bn lost (by us defaulting and being kicked out) might be a small price to pay to save the Euro !


----------



## galleryman (24 Nov 2010)

yes but why lend us another 90bn on top of all the money already lent to the Irish banks by the ECB and German banks and THEN kick us out of the Euro.  That makes no sense.   If we are getting the boot we wont get any more cash first.


----------



## Troy McClure (24 Nov 2010)

Europe needs Ireland to survive to stop this spreading further. They dont give a hoot about Ireland only saving the single currency and stop the contagion spreading to banks abroad. The markets have already written us off to default and it may be enivable as the debt levels and the level of austerity proposed is simply too big and too much. It's akin to taking a baseball bat to a child and expect it to get up and carry on. The markets know this and Europe doesn't care. 
If this goes onto Portugal (and it will) then Spain is next. Spain makes up 10% of the European Economy, so if this happens it could be the begining of the end for the Euro. The ECB need to have a massive quantitive Easing process to recapitalise the banks in this event if not already.
They are trying to avoid this at all cost.
If the Euro ends we will have to devalue over night. (If you have 100 today it may be 70 tomorrow). It's not an exchange rate.
We probably would recover quicker from a default than what is been lined up for us. This is going to be spoken about more over the coming days/weeks.


----------



## Godfather (24 Nov 2010)

troy mcclure said:


> europe needs ireland to survive to stop this spreading further. They dont give a hoot about ireland only saving the single currency and stop the contagion spreading to banks abroad. The markets have already written us off to default and it may be enivable as the debt levels and the level of austerity proposed is simply too big and too much. It's akin to taking a baseball bat to a child and expect it to get up and carry on. The markets know this and europe doesn't care.
> If this goes onto portugal (and it will) then spain is next. Spain makes up 10% of the european economy, so if this happens it could be the begining of the end for the euro. The ecb need to have a massive quantitive easing process to recapitalise the banks in this event if not already.
> They are trying to avoid this at all cost.
> If the euro ends we will have to devalue over night. (if you have 100 today it may be 70 tomorrow). It's not an exchange rate.
> We probably would recover quicker from a default than what is been lined up for us. This is going to be spoken about more over the coming days/weeks.



+1


----------



## Wahaay (24 Nov 2010)

I have a fairly substantial sum with Rabodirect and Northern Rock at the moment but naturally it's impossible to get through to their Customer Support at this time due to everyone trying to open up new accounts !

Should the time come to get out of euros and transfer to Sterling in a UK bank do RD and NR allow electronic transfers to them or do they have to go via an Irish bank such as AIB ?


----------



## galleryman (24 Nov 2010)

No you cannot transfer from RaboDirect to a foreign bank a/c. Not sure about NR. 

I would love to move all my money to a safe currency but the problem is, what is a safe currency at the moment?. . The Euro is weakening all the time. Down a lot today. If we end up in Punt Nuas, who can predict what the final FX rate between the IR£ and € will be.  The € may not even survive and if you have opened foreign bank a/cs you could end up with Belgian Fr and French Fr instead of IR£.   Sterling??? The Uk need quantative easing also and as their biggest trading partners are Ireland and Europe, they will not be keen to see their currency appreciate too much against us and the rest of Europe as that will kill their exports. 

If it was easy to find a safe currency and predict FX movements we would all be FX traders and we woudl all be rich.  It's not that easy. 

However the reality is that whether you decide to keep your money in Irl Banks, or in Foreign owned banks in IRl, or offshore in €, or offshore in other currencies, you are making a decision and placing a bet.  Not doing anything _IS_ still a decision/action that may or may not pay off.


----------



## txirimiri (24 Nov 2010)

I would see a difference between moving money to try and find a safe currency for one's life savings and predicting FX movements to get rich.

For instance, I take galleryman's point fabout the UK and quantitative easing. But if I am looking to move my money not to speculate against and benefit from euro/sterling exchange rate moves but to hedge against Ireland leaving/being kicked out of the euro thereby precipitating a new currency which would immediately massively devalue and/or the deposit guarantee collapsing and savings being lost entirely, surely a sterling account in a UK bank in the UK would be a reasonably sensible bet? Or indeed a euro account in Germany, on the assuption that whatever currency that Germany ends up with will be relatively stable? 

Have to say I am tempted to look into opening a sterling bank account in a British bank in N Ireland


----------



## TLC (24 Nov 2010)

So - to repeat my original question - is there a consensus here about what we should do to try & safeguard our life savings? I'm really so worried about trying to make them secure we worked hard for that money - except for the small inheritance we recd - paid our tax over the years, didn't go mad etc. I would feel bad about moving money out of the country & feel a bit disloyal even considering it, but we'll never be able to save that money again.


----------



## Slim (24 Nov 2010)

TLC said:


> So - to repeat my original question - is there a consensus here about what we should do to try & safeguard our life savings? I'm really so worried about trying to make them secure we worked hard for that money - except for the small inheritance we recd - paid our tax over the years, didn't go mad etc. I would feel bad about moving money out of the country & feel a bit disloyal even considering it, but we'll never be able to save that money again.


 
I am in the same boat and am considering my options to try to protect our life savings. Today I closed an AngloIrish Bank account and will split the proceeds between Ulster and National Irish, keeping the amounts under the guarantee limits. I will also consider placing some(more) into a NI sterling account just in case. I am also considering buying a small amount of gold. I will hold at least the amount of our o/s mortgage in the account of the lender. Slim


----------



## TLC (24 Nov 2010)

Thanks Slim, we'll have to consider it too - it's a terrible dilemma - it almost feels unpatriotic to move what money we have


----------



## galleryman (24 Nov 2010)

TLC, I wish I could answer your question, but the best I can do is tell you what I am doing to achieve the same goal as you, to protect my nest egg.

I split my INBS a/c between Nationwide Uk (not exceeding the UKFSC Scheme limit 50k per head) and RaboDIrect (not exceeding the Dutch DGS €100k per head). to bet against an Irl Gov default.
I gave notice on my An Post Deposit a/c and will move offshore to Keytrade and (not to exceed the Belgian DGS whcih is only €40k per head) and SOME OTHER FOREIGN Bank yet to be decided. To protect against both an Irl Default AND a departure of Ireland from the Euro.
Left some money in ptsb well below the Irish DGS limit so that I have some money earning a decent rate of interest and in a bank that I can get to and queue for my money if I needed to. 

Personally I believe it is prudent to diversify, spread it around and worth all the research and hassel of opening multiple accounts, but only time will tell.


----------



## Delboy (24 Nov 2010)

thought Keytrade was 100k per person?


----------



## galleryman (24 Nov 2010)

I don't believe so, the Belgian guarantee appears to be CURRENTLY only €40, 

http://en.wikipedia.org/wiki/Deposit_insurance


----------



## Bcommercial (24 Nov 2010)

galleryman said:


> I don't believe so, the Belgian guarantee appears to be CURRENTLY only €40,
> 
> http://en.wikipedia.org/wiki/Deposit_insurance



Not true, Keytrade is 100k, feel free to put me right if I've overlooked something though! 

[broken link removed]

and

[broken link removed]


----------



## galleryman (24 Nov 2010)

thanks Bcommercial, that's a much more reliable source of info than wiki.


----------



## farmerette (24 Nov 2010)

galleryman said:


> No you cannot transfer from RaboDirect to a foreign bank a/c. Not sure about NR.
> 
> I would love to move all my money to a safe currency but the problem is, what is a safe currency at the moment?. . The Euro is weakening all the time. Down a lot today. If we end up in Punt Nuas, who can predict what the final FX rate between the IR£ and € will be. The € may not even survive and if you have opened foreign bank a/cs you could end up with Belgian Fr and French Fr instead of IR£. Sterling??? The Uk need quantative easing also and as their biggest trading partners are Ireland and Europe, they will not be keen to see their currency appreciate too much against us and the rest of Europe as that will kill their exports.
> 
> ...


 

anyone who put money in american dollars three weeks ago has made a small killing , who would have though six months ago that the dollar would see such a rebound against the euro


----------



## Delboy (25 Nov 2010)

http://www.guardian.co.uk/world/2010/nov/24/belgium-financial-markets-hit-list

maybe Belgium is the safest place to put the family silver either!!!


----------



## galleryman (25 Nov 2010)

Delboy said:


> http://www.guardian.co.uk/world/2010/nov/24/belgium-financial-markets-hit-list
> 
> maybe Belgium is the safest place to put the family silver either!!!


 

I trust you meant to say ISNT the safest place either.


----------



## galleryman (25 Nov 2010)

That has worried me Delboy.

I was about to put some cash in keytrade and now I'm not so sure.

I started a thread to see if we could have a Country League Table, to show us all which countries are at the top in terms of risk of default or Bailout

maybe we could try and get this going...

http://www.askaboutmoney.com/showthread.php?t=146671


----------



## Delboy (25 Nov 2010)

galleryman said:


> I trust you meant to say ISNT the safest place either.


d'oh!!! yes, meant to say ISN'T

if your looking for the safest within the euro area, surely Germany is top and there's threads in this forum about their banks e.g. Deutsche bank


----------



## bmcgonig (25 Nov 2010)

As a US resident Im able to buy an Exchange Traded Fund that represents the value of the EURO (the ticker symbol is FXE) or most other currencies for that matter.  I was wondering if that is available to you guys?  And if so wouldn't it be better just to buy that ETF with your bank deposits?


----------



## farmerette (25 Nov 2010)

bmcgonig said:


> As a US resident Im able to buy an Exchange Traded Fund that represents the value of the EURO (the ticker symbol is FXE) or most other currencies for that matter. I was wondering if that is available to you guys? And if so wouldn't it be better just to buy that ETF with your bank deposits?


 
 is that not just for those who want to short or go long on currencies , i googled code for swiss franc and all that came up was LCHF ( long on swiss franc ) , if this isnt the case , could you tell me whats the code for the swiss franc and norwegian krona


----------



## bmcgonig (26 Nov 2010)

farmerette said:


> is that not just for those who want to short or go long on currencies , i googled code for swiss franc and all that came up was LCHF ( long on swiss franc ) , if this isnt the case , could you tell me whats the code for the swiss franc and norwegian krona




The ticker for the Sw Franc is FXF.   Again, this can be bought in the US, but Im not sure that it can be bought here. 

Yes. Ur right. Now that I think of it its like going long the Euro and short the Dollar. Not what u want to do if u just  want to keep ur money in Euros.   However buying FXF might be a sound idea.


----------



## Bcommercial (26 Nov 2010)

bmcgonig said:


> The ticker for the Sw Franc is FXF.   Again, this can be bought in the US, but Im not sure that it can be bought here.
> 
> Yes. Ur right. Now that I think of it its like going long the Euro and short the Dollar. Not what u want to do if u just  want to keep ur money in Euros.   However buying FXF might be a sound idea.



Don't know anything about EFT's, but anyone out there got any ideas about the following...

Sell euros and buy eg Norwegian kronen as a forex trade by going short on the currency pair. Is it not the case that forex brokers offer much tighter spreads than banks and you'd also benefit by holding the currency with the higher of the 2 interest rates (NOK 2% - EUR 1% = 1%) and thereby also be getting interest on your holding of the foreign currency. Maybe some forex traders could shed more light on this?


----------



## farmerette (26 Nov 2010)

bmcgonig said:


> The ticker for the Sw Franc is FXF. Again, this can be bought in the US, but Im not sure that it can be bought here.
> 
> Yes. Ur right. Now that I think of it its like going long the Euro and short the Dollar. Not what u want to do if u just want to keep ur money in Euros. However buying FXF might be a sound idea.


 
so in a nutshell , buying this via a stockbroker is effectivley the same as holding money in a dollar account in some other jurisdiction

p.s , would you mind telling me what the code is for the U.S dollar , better again , where can you find the codes of international currencies , all i can find is codes for going long or short 

thanks


----------



## Savvy Row (3 Dec 2010)

The thing is, if (for whatever reason) Ireland were to find itself reverting to the Punt Nua, as far as I am aware, an acccount with RD or NR would be regarded as an Irish account and would be converted out of Euro - like it or not. This is because although the mother bank is Dutch and British (respectively), it is still and Irish branch. Danske Bank is the mother of NIB - but in the event of a reintroduction of the Punt Nua, any accounts in NIB would be sucked in also. Guarantee to refund in the event of insolvency does not mean guarantee in the event of the host country changing it's currency.
The real question is, if you were to open and account with a foreign bank which did not have a limb in this country, would you be protected against having your deposit repatriated and converted to Punt Nua?


----------



## Duke of Marmalade (3 Dec 2010)

People are really losing the run of themselves here. They are talking about two events - change of currency PLUS one off devaluation. It has never, ever, ever happened. It is pure confiscation. What is the difference between the following two approaches?:

A. Decree that all deposit accounts etc. now denominated in euro are to be interpreted going forward as in punt nua. Conversion rate 1 for 1. Next state that the exchange rate for the PN will in future be 50c. 

B. Decree that all deposit accounts etc. are to be halved in value and interpreted as PN going forward with 1 PN = 1 €.

This latter, I hope most would agree would be sheer theft and totally unconstitutional and yet it is the exact same as (A) which people seem to think a possibility.

The only plausible scenario (and one which doesn't achieve anything) is to convert from € to PN and let the exchange rate slowly (or maybe rapidly) slide from neglect.  Plenty of time in that scenario to jump ship.


----------



## Perplexed (3 Dec 2010)

Unfortunately in the case of Argentina, they closed the banks and introduced their break from parity with the US$ overnight.
Nobody had access to their money till the deed was done...


----------



## Duke of Marmalade (3 Dec 2010)

Perplexed said:


> Unfortunately in the case of Argentina, they closed the banks and introduced their break from parity with the US$ overnight.
> Nobody had access to their money till the deed was done...


Completely different.  Devaluing exchange rates is common - UK and Ireland having done it in in the recent past.  But changing currency at one rate and then devaluing the new currency to a lower rate is theft.


----------



## Savvy Row (4 Dec 2010)

So what would happen? Would a house currently selling for Euro 300k become PN 300k? - and so it would make no difference to the potential buyer - just a different name for the currency? Would it be that the only sufferer would be the person travelling abroad?


----------



## jpd (4 Dec 2010)

Or buying anything from abroad - like petrol, gas, tomatoes, lettuce, flowers, coffee, etc - this is just a random selection from my shopping basket this week


----------

