- Capital Flight Intensifies in Italy and Spain; Curiously, Money Flows Into French Banks
by mishgea, http://mishtalk.com/
Money continues to pour out of Italian and Spanish banks for safer havens. This month I note a curious side effect: A huge amount of money went into French banks instead of German banks. The following table shows the winners and losers. (top of post)
Lack of Trust
To encourage more lending, ECB president Mario Draghi cut the deposit rate for money parked at the ECB from -0.2% to -0.3% on December 3.
Clearly that did not work.
Europe Fears Bail-Ins
Stepping back a bit, here’s a key question: What caused the depositors to flee their banks in the first place? The answer is fear of bail-ins, confiscations, capital controls, and bank failures like we have seen in Greece and Cyprus.