Greek Banks Plan For ‘Bail-In’ Withdrawals From Consumer Deposits

In a possible redux of the handling of the Cyprus economic crisis from 2013, Greek banks are setting new contingency plans for a possible “bail-in” to avoid collapse. The country may be headed for a full economic collapse, under certain circumstances, and the banks may collude to give well-funded accounts a “haircut,” report banking sources within Greece to the Financial Times.

Greek Banks Move Closer to “Bail-In”

A “bail-in” or “haircut” is a confiscation, a raid, on uninsured consumer funds above a certain threshold to prevent the bank from default. One Greek bank is contemplating withdrawing at least 30 percent of deposit accounts with balances as low as €8,000 Euros. In the Cyprus “bail-in” from March of 2013, the bail-in was on all uninsured deposits over €100,000.

It [the haircut] would take place in the context of an overall restructuring of the banking sector once Greece is back in a bailout programme,said one source with knowledge of the situation. This is not something that is going to happen immediately.

No official decision has been made on a course of action, but this contingency may come to pass if the ECB pulled loans or declares the country insolvent. Currently,

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