Monday, May 21, 2012

Greeks and others living in the EU's periphery are withdrawing savings in a 'bank jog'

To distinguish the on-going reduction in deposits in the troubled EU countries' banking systems from a panicked run on the banks, a new term has been developed:  a bank jog.

According to the Telegraph,
Retired Athens hospital worker Giorgos Vassilakis will today make the same journey to his bank in central Athens to make a withdrawal. 
The 65-year-old has been doing the same thing daily, steadily depleting his own savings pile since the country’s cataclysmic May 6 general election. He is busy building up a reserve of cash at home to protect himself should the worst happens and the country falls out of the euro. 
“It’s a bit to hold in my home just to be sure I’m okay,” he said. “Since I heard the rumours after the election I have been withdrawing money to have a €3,000 to €5,000 a small stash at home to keep safe.” 
Economists have dubbed the collected effect of worried Greeks taking money out of savings accounts a “bank jog,” not quite a run but still a deliberate trend in the same direction. 
Bank branches have remained relatively calm and surprisingly empty despite headlines that hundreds of millions were being pulled out each day. But savers are factoring in some form of collapse and that affects how much cash they hold....
The results of the bank job are greater dependence on the ECB for funding in the peripheral countries and a flow of savings into countries deemed safe.  This flow of savings has taken the form of deposits in Germany and Switzerland as well as higher real estate prices in London.

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