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Mitsubishi Financial

More Evidence Of A Global Bail-In Policy

by | Thursday, 13th June 2013
The policy of "bail in", where failing banks steal the savings of its depositors as happend in Cyprus, is beginning to be formalised, starting with Japan.

I have been reporting for some time now that a number of central banks have already published policy documents detailing how bail-ins would work. The Bank of Canada, Bank of New Zealand, and the FDIC and Bank of England jointly, have all published something on the issue.

At its heart is the idea that savers are, in fact, "unsecured creditors" of the banks, and therefore come second only to shareholders should their assets need to be confiscated in order to keep a failed bank going for a little while longer.

Yesterday, Nikkei highlighted that Japan's Financial Services Agency will enact new rules to force failed bank losses onto "investors". 

The Japanese Parliament ratified the proposals yesterday.

Also yesterday, Sergei Storchak, a Russian Deputy Finance Minister stated that there would be a declaration by heads of state attending Septembers G20 meeting in St Petersberg which would bring an end to the policy of taxpayer bailouts. The implications of what he said was that the G20 would also be jumping on the bail-in policy instead.

The preparations for widespread confiscation of assets are nearly complete.

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