Not long ago I began writing a short story about a futuristic dystopia that began with the collapse of the banking system. People first became aware that something had gone very wrong when they were unable to withdraw money from their ATMs. Then a week-long bank holiday was announced…
It was supposed to be in the realms of science fiction until I switched on the news the other day and heard about what was happening in Cyprus. People were unable to access their cash after the government proposed a 10 per cent levy on savings to help pay for a banking bailout. Queues of people immediately formed at ATMs until the money simply ran out.
Although most political commentators were busy trying to isolate the incident as a uniquely Cypriot problem that had no bearing on the bigger economies of the rest of Europe, it demonstrates how little we can now trust our banks. The saying goes, if you want to commit a robbery, open up a bank. In Britain, we are all aware of the banks’ methods to extract money from people what with their spurious bank charges and PPIs scams. Take it a step further and charge people to deposit their savings and then stop them from withdrawing their money when reserves run low!
Although Cypriot leaders were reported to be agonising over the decision to impose the levy, knowing the anger it would provoke, I am reminded that a few years back in Britain banks wanted to charge people for using cash machines. That is, taking their own money out of their accounts. They backed off but you just know that it is only a temporary retreat. Banks all over Europe have been bailed out to the tune of trillions. It’s easy money and they don’t give a toss about their customers.
When Northern Rock collapsed in 2007, as long queues of panicking people formed outside branches, the government promised to honour customer savings. That was then. Last year in Spain, a new bail out deal saw 350,000 small savers and pensioners losing billions in a hurried debt write off by Bankia, which was formed in 2011 from a merger of provincial savings banks. In the case of Anglo Irish Bank, shareholders whose equity was once worth €13bn were left with nothing following the bank’s recapitalisation and nationalisation in January 2009. In Italy, an Italian friend told me, there is now a limit to how much you can withdraw from one’s account. If you’re lucky enough to have €50,000 put away, you can’t take it out all at once.
This all goes to show your money’s not safe in the bank. As I’ve hardly got any, the consequences for me are not so great. But there’s something to be said for humble credit unions or informal saving schemes like Caribbean pardners in which friends contribute to a weekly pool of money and draw from it at intervals. If you’ve got loadsa money, converting it into gold or silver seems to be a pretty good bet.
Even if we don’t resort to such measures, we are generally cynical about the banks, recalling the days when we were able to directly ring up our bank branch or arrange to see the bank manager in person. Now you phone a call centre or have to see a financial adviser, who only wants to sell you expensive bank products. And we’re sick to death of stories about fat cat bankers who’ve been found guilty of fraud and money laundering but are still laughing all the way to, well, the bank.
As the people of Cyprus have discovered, once the banks have got your cash they can do anything. What’s yours is theirs, to be gambled away rather than investing back in the economy. So if you hear noises being made about moving towards a cashless society or are told you can only withdraw a certain amount of money from your account, start stashing your cash under your bed. It will be far safer there.