What happens to our deposits if IMF step in?

G

galleryman

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I would like to know what happens to the "Government Guarantees" if the IMF come in.

I have all of my money from my house sale in deposits in Irl. I do not have more than 100k in any institution so that supposedly ALL money in guaranteed by the state.

Is that guarantee going to be honoured if Ireland is declared bankrupt by the rest of the world?

Can the IMF say to all deposit holders in Ireland, "Sorry but the money isn't there and you now all only have 20% of what you deposited"?
 
the problem I can see with this question is ,
nobody knows for sure .
Therefore it is just educated guess work as to what will /could happen.
 
"the problem I can see with this question is ,
nobody knows for sure .
Therefore it is just educated guess work as to what will /could happen."

What has happend in countrys where the IMF have previously stepped in?

If you did believe that the IMF were taking over in the next few days, what would you do now to secure your money etc?

I think this is what OP was asking...........
 
lightswitch said:
"the problem I can see with this question is ,
nobody knows for sure .
Therefore it is just educated guess work as to what will /could happen."

What has happend in countrys where the IMF have previously stepped in?

If you did believe that the IMF were taking over in the next few days, what would you do now to secure your money etc?

I think this is what OP was asking...........
Click to expand...

Your money is secure if the IMF come in. The IMF lend money and of course there will be consequences to the public finances but they dont raid peoples deposits.
 
"What has happend in countrys where the IMF have previously stepped in?"

"The IMF lend money and of course there will be consequences to the public finances but they dont raid peoples deposits. "

Genuine question .

Have the IMF previous actions in other countries forced a Goverment to use depositors money to pay off loans?
 
Ask yourself this question.
- Where will the money come from to honour the guarantee?

If you're happy with your answer, then you've nothing to worry about. Otherwise consider spreading the risk outside of Ireland.
 
umop3p!sdn said:
Ask yourself this question.
- Where will the money come from to honour the guarantee?

If you're happy with your answer, then you've nothing to worry about. Otherwise consider spreading the risk outside of Ireland.
Click to expand...

Happy is not a word being used too much lately with regards to any of this.
 
thanks for the replies.

I just wasn't sure if the IMP had similar powers to say an Administrator sent in to take over a financially troubled company etc.
 
Micheal Martin has ruled the possibility out:

[broken link removed]

So it's definitely not going to happen then.
 
As the saying goes: "Don't believe anything until it has been officially denied."
 
As I understand it during Argentinas default, accounts were temporarily blocked. The currency was devalued before they were unblocked.

As Ireland is in the Euro the currency couldn't be devalued? Though the Argentines thought their Peso was linked to the dollar.
 
cremeegg said:
As I understand it during Argentinas default, accounts were temporarily blocked. The currency was devalued before they were unblocked.

As Ireland is in the Euro the currency couldn't be devalued? Though the Argentines thought their Peso was linked to the dollar.
Click to expand...

+1

We're not "linked" to the euro we are part of it. Argentina did pull a fast one effectively refusing to honour the pegging of it's Peso to the Dollar. However we are not in the same position as the dollar in that example is actually our currency

Also the IMFdon't "come in". There is a fund established by the IM and Eu that the country can borrow from if nobody else will lend. there are conditions attached to this but no deposits ahve been raided in Greece

Of course the Gauruntee is another matter, as previous posters say regardless of political promises where would the Govt. get the money to honour deposits??
 
To reply to mmclo above. How is the guarantee another matter, surely it is exactly the same matter. Of course the euro is our currency, but your Euros in the bank are only worth what the the bank or failing that the Govt can pay out.

At present the banks on their own could not honour the deposits. (B of I possibly could but if AIB went down B of I would be swept away also).

In the event of the Irish government becoming unable to meet its obligations as they fall due, and currently financial markets are charging a premium on Irish govt bonds because they fear this might happen, what are your chances.

Ah yes the IMF EU bail out fund.

The reality is that €750bn (not fully funded) the takes care of Greece, and Ireland too if we are next no problem, our absolute numbers are small in the European context. But the present bail out fund could not bail out Spain or Italy if that became necessary. These are not likely to go unless things get worse but that is a possibility.

More likely is that Portugal will turn to the fund. That might be OK Portugal is small too. By then the markets will be so nervous that the German interest rates will begin to rise, and their voters will become reluctant to support more countries.

The Irish Govt currently has an income of €30bn per year and is spending €50bn. That cannot continue. [And should not but that is a different issue.] If an individual had an income of €30k and was spending €50k their bank manager would laugh at talk of cutting expenditure by €4k

I dont think it unduly alarmist to ask what happens if the bail out fund cannot or will not ride to the rescue.

Ireland would be forced out of the Euro and teachers salaries and bank deposits would be repaid in NIPs (new Irish punts). And before anyone points out that there is no legal mechanism for a country to be forced out of the Euro please consider force majeure
 
Ha Ha !

But what is planned is a reduction of the deficit of 4bn in 2011, another 4bn in 2012, another 4bn in 2013 and another 4bn 2014 so that by 2014 we will be spending what we are earning more or less ie deficit will fall from 50- 32 = 18bn to 2bn

Not sure that this has seeped into everyone's conscience yet - it will be a tough 4 years.
 
I do not think that the government can cut the deficit by 16bn in 4 years ?

Just for 2011 they have to cut public service wages, social welfare payments and raise taxes to achieve just 4bn saving.

I cannot see how they are going to do this for 4 years in a row without causing anarchy. There will be general elections every year or so as each sucessive government fails to get support for these budget cuts.

Eventually the IMF will have to set the agenda and run the country.
 
Yes I don't necessarily disagree with ceremegg . I suppose whether we would be "booted out" of the Euro is as much a political question and I would say the Germans have sunk too much into the project to walk away and such a break up would destabilise many european economies which are recovering.

Agreed the ECF probably couldn't cover Spain, not sure what their figures are. Maybe that's an argument in favour of getting in there early at 5% as the hardship is coming anyway!

I say it's a seperate matter as I think it's mainly related to the public finances and the bond markets. Or to be more accuratre the bank gauruntee was a fraud from day one as the Governemnt could never honour it, making most discussion of it fairly irrelevant. So it's a confidence trick but then in many respects so too is the entire banking concept.
 
The Eurozone will do everything it possibly can to keep Ireland in the Euro. If so, deposits will most likely be subject to daily withdrawal limits for some time - most likely quite low!
 
I think wiki is very clear under the "Criticism from free-market advocates" section:
http://en.wikipedia.org/wiki/International_Monetary_Fund

...The IMF is monetarist so it prioritizes the money versus the social welfare...

What I don't understand is: why was Argentina then allowed to default without paying their creditors?

...And most of all: why did US let Lehmann Brothers go bankrupt?

At the end of the day it's the strongest who always wins and goodbye to the poorer people that dont diversify their savings...:confused:
 
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