bank run

This morning we learned that after hours of tense negotiation, Europe has hammered out a 10bn euro "bailout" of Cyprus. I put the term bailout in quotes because the key feature of this deal is the bail-in of Cypriot depositors to the tune…

The Spanish bank run caused by redenomination risk is over. And Spanish bond yields are now back to around the 5% level today. Apparently, the ECB's monetisation scheme has worked - and without Spain's having entered a Troika program yet…

Yesterday I wrote a lot about this topic for Gold subscribers, asking "Will Merkel grant ‘austerity model’ Ireland retroactive bank recap mutualisation?" This post gives a full account of the European bank recap issue, so I won't re-hash…

Two weeks ago I told you that Spanish Prime Minister Mariano Rajoy’s humiliating defeat to Merkel had narrowed options to sovereign bailout, monetisation or default for Spain. Now that the Spanish bank bailout is unraveling and Catalonia is…

Yalman Onaran has written up a lengthy review of the deposit flight now ongoing in Europe. It is a reminder that Mario Draghi's plan to backstop Spanish and Italian sovereign debt can only do so much to stop redenomination risk, the…

It is clear that lending to Spanish banks is now funded entirely via TARGET2 (borrowing from the rest of the Eurosystem) rather than with deposits. In fact deposits at the Bank of Spain by the Spanish government and Spanish banks (excess…

Quick post here to highlight then continued losses in Spanish property markets and the effect on Spanish banks. House prices in Spain were down 11.2% year-on-year in July. That's the largest fall since March 2011 and it brings all in losses…

Many orthodox economists ironically adopt something close to a “loan pusher” argument: the excess global saving pushed interest rates down, leading to excessive borrowing by debtor nations that consumed beyond their means. Although the…

Just when you think that things can get no worse in Spain, they do.

The large increases in Target2 imbalances at the heart of the euro zone's banking system are widely considered not just a risk to national governments in the event of a eurozone breakup, but also a sign of capital flight. We have seen the…