BANK runs don’t always involve small depositors queuing round the block. As we saw in 2008, institutions can withdraw
their money with devastating effect.
US money market funds are exiting the euro zone in what can only be described as a stampede. The rating agency Fitch says that the funds’ exposure to euro zone banks has dropped by 33% since May this year, and is now 78% down on its May 2011level. (French exposure is down 88% since May 2011.) Just over 8% of all their assets are now in the euro zone, compared with nearly 40% in 2009.
Britain, though not in the euro zone, has not been spared in the rush. Money market exposure is down 23% since May 2012 and 56% down on May 2011. Luckily, few banks Continue reading “Bank Runs and the Euro Crisis :”