The Eurozone… a safe place for deposits?
The 40% tax on uninsured deposits exceeding E100,000 within Cyprus’s banking system proves a Euro held in one of the seventeen Euro countries is not the same as a Euro held elsewhere.
Despite the “whatever it takes” pledge by Mario Draghi, President of the European Central Bank, in July 2012, it now appears that the Eurozone periphery is not a safe place to have deposits.
A “run” on banks in Malta, Estonia and Slovenia, for example, seems increasingly likely as non-performing loans within their banking sector come to light.
While investors should be aware that together with Cyprus, these economies account for 0.75% of the Eurozone, the ramifications of financial repression need to be understood.
Watch for an exodus of capital from the Eurozone periphery.
Chief Executive Officer of Montgomery Investment Management, David Buckland has over 30 years of industry experience. David is a deeply knowledgeable and highly experienced financial services executive. Prior to joining Montgomery in 2012, David was CEO and Executive Director of Hunter Hall for 11 years, as well as a Director at JP Morgan in Sydney and London for eight years.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
