These institutions could be carved out of commercial banks, leaving behind the depositor-only entities.
If the depositor were a Jew, or more stubborn, he was in serious trouble.
Presently, the money becomes the property of the bank and the depositor receives a demand note.
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Clearly the Cypriot parliament must deliver its side of the bargain by voting through the depositor levy.
Private insurance is another option for the entity or the depositor, but one which has a cost associated with it.
If a wire arrived at a bank, properly coded and sent, anything they did could be a disaster to the depositor.
The depositor losses were an IMF initiative from the start, officials say.
They also put physical and psychological distance between the depositor and his bank, which is counter to the idea of a community bank.
Under that decision, money deposited into a bank is the property of the bank and the depositor holds a demand note in return.
If the depositor was prominent or highly placed, and some were, a mere visit from the Gestapo usually was enough to bring him around.
Change banking laws so that money deposited in a bank remains the property of the depositor just as it would if he deposited the money in a warehouse.
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In most large EU countries, insolvency laws don't give preference to depositors, so some countries fear that including the depositor preference in the directive would leave savers in small banks, which are more likely to be sent into regular insolvency, worse off.
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In this high-tech era when money moves at the speed of light, it makes less and less sense for banks to sit on a customer's deposit for days, collecting interest on the "float" while the depositor waits to draw on his deposit.
Today the Cypriot parliament is expected to vote on the proposed bailout measures, including the controversial depositor levy.
In that event, the sensible depositor would withdraw their money in physical Euro form, pack it into a suitcase and bury it in their garden.
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The officials who negotiated this deal are pretty sure that the hit to depositor confidence will be less than if the Cypriot government had been able to go ahead with last week's plan and raid the accounts of even small-scale depositors.
While I understand its appeal as a tool for resolving banking problems, I think the use of depositor levies could end up causing significant problems for the European banking sector.
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The coming weeks, leading to the second Greek election, will see the interplay of opinion polls, depositor behaviour and the European Central Bank's bi-weekly decisions on the Bank of Greece's lending capacity.
But for the smaller retail depositor, we do try to make sure that they understand our deposit insurance rules.
Its use may halt a bank run, but at the cost of eventually trashing the value of the currency and indirectly the value of depositor accounts too.
Depositor action groups say that KSFIOM should be placed into liquidation, which would trigger payouts from the Isle of Man depositor protection scheme.
At a minimum, like we saw during the Irish, Greek, Portuguese and Spanish banking scares, we expect to see some depositor migration from the banks of the more economically challenged Eurozone periphery into the Eurozone center and to the US (and into Euro currency too).
Pensions are a contract between an employee and his employer that is not unlike the contract between a depositor and his banker.
In one case that my partner and I worked many years ago at a regional bank, this premise was illustrated when an elderly depositor called the bank to report an apparent accounting error of about twenty dollars in interest in her IRS 1099 for her two Certificates of Deposit.
The only things that a common depositor gets is basic account services and perhaps a small amount of interest, but check out what the Henry Potters and even the much nicer bankers have and how they operate.
One way of stopping that, says my market interlocutor, is if the Eurozone authorities would issue pan-European depositor insurance, effectively saying to everybody, everywhere in the zone, that the other members would make good bank deposits in the event of exit, or capital controls etc.
However, given the full extent of unrealized bad debts in Europe, it is hard to see why anyone should rule out depositor levies being imposed elsewhere in the future.
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This rule goes back to the old days when accounts were kept by hand, and moneys for each depositor were actually held (at least on paper) in the branch where their account was kept.
Now that people know that a depositor haircut is part of the European toolkit for dealing with banking problems, why would you sit around and wait for it to happen to you?
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With its huge depositor base, private investors salivated over the prospect of buying it up.
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