EU member nations are considering adopting measures that would allow states to protect against runs in failing banks by preventing people from accessing account deposits for up to 20 days. Reuters has revealed the proposal after receiving a leaked “EU document”.
Also Read: European Commission Launches Digital Currency and Dark Web ConsortiumThe Proposed Account Freezes Extend the Ability for States to Suspend Account Withdrawals
It has been revealed that EU states are considering implementing measures that would allow states to temporarily prevent citizens from making withdrawals from the accounts of failing banks. The proposals have been drafted since the start of 2017, and are designed to prevent bank runs and crises within the financial sector.
The proposed account freezes extend the ability for states to suspend account withdrawals – which currently exempt insured deposit accounts that hold less than 100,000 euros. The plan would allow the suspension of payouts for five working days, with a possible extension of 20 days allocated for “exceptional circumstances”. Existing EU legislation allows for states to initiate a two-day suspension of certain payouts in the event of potential bank failure – with deposits explicitly excluded.The Proposals Have Received Criticism From Some European Financial Institutions
The European Union is no stranger to bank runs, with Spanish bank, Banco Popular, failing in recent months – the collapse of which was intensified by a sudd...