International Herald Tribune
June 1, 2012
First of all, thank you for the large number of excellent questions in response to our call for your queries about the euro crisis. I have picked some questions that were most representative of the interest — from all over the world — and most pertinent. And many thanks to readers like “abo” from Paris who did my work for me and supplied replies of their own.
I’ve condensed and edited the questions somewhat, so apologies if I have misconstrued anything.
Q. An anonymous reader writes:
I would like to understand why it appears that the governments of Greece and Spain, to say nothing of European Central Bank officials, have done nothing to address the looming threat of bank runs in these countries. It seems like they should have long ago thought about how to address this most basic threat.
A. Your question gets at one of the fundamental issues raised by the crisis. Banks are still regulated at the national level, but their problems can have international consequences.
Greece and Spain have deposit guarantee programs designed to reassure bank customers and prevent runs. But bank customers naturally may wonder whether the guarantees are any good, considering that the governments have severe fiscal problems of their own.
European leaders have talked about a Europe-wide deposit guarantee fund, but so far there has been little action. Mario Draghi, the president of the European Central Bank, has promised that healthy banks won’t be allowed to run out of money. But the E.C.B. can only give banks loans. It can’t replace depleted capital reserves or guarantee deposits.
So for the time being bank runs remain a threat.
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