Do commercial banks have enough reserves?

Old Codger said:
I think that in Greece the first $10,000 was not touched in the 'Bail-In', and I suppose there will be something like that for the pensioners etc in any 'guarantee' situation.

Ironically, current banking deposit laws government protects your first $250,000 in each bank account.
 
House said:
Indeed but I've only heard 'Jolly Green Giant' for the $100 but that's it. Greenback is purely USD in my little green book.

Hundred dollar note used to be a greynurse now its a leo wanker
 
radiobirdman said:
House said:
Indeed but I've only heard 'Jolly Green Giant' for the $100 but that's it. Greenback is purely USD in my little green book.

Hundred dollar note used to be a greynurse now its a leo wanker

I always knew it as a 'grassy lawn', along with 'pineapples' and 'lobsters'
 
JulieW said:
radiobirdman said:
House said:
Indeed but I've only heard 'Jolly Green Giant' for the $100 but that's it. Greenback is purely USD in my little green book.

Hundred dollar note used to be a greynurse now its a leo wanker

I always knew it as a 'grassy lawn', along with 'pineapples' and 'lobsters'

Back in the day
$50 pony
$100 spot
$500 monkey
$1000 gorilla


'Leo wanker' probably local slang
 
SDJ.

My comment in #16,


"And as far as the Government guarantee is concerned, they are BROKE! They have SFA to honour the guarantee and all you will end up with is a pretty piece of paper that says 'Australian Treasury Bond'.
99 years at 0.1% interest!
The Bond Markets will then price that at 5% of face value! IF you are lucky!"



In other words, the $250,000 guarantee is meaningless.

JMO


OC
 
Old Codger said:
SDJ.


In other words, the $250,000 guarantee is meaningless.

JMO


OC


We have something like that in Canada. CDIC guarantees up to $100k per account. So an individual can have multiple accounts as long as it's below $100k they will get insured.

But if there was a major economic collapse, it would be useles if any of the banks failed.

According to the CDIC's 2012 Annual Report, CDIC protects $622 billion CAD in total eligible deposits, and has $2.44 billion CAD in assets to meet insurance claims.[5] This amount represents 0.39% of total eligible deposits. The CDIC is also authorized to borrow up to $19 billion if necessary from the federal government or the financial markets, and may request further funds from Parliament.

Example would be, RBC Canada's largest bank. Has about $180b in deposits. If RBC or any of our 5 major banks fail, where will the CDIC get its money to cover? I just assume the govt just basically "prints/digitizes" more.
 
In our case, I think the Big 4 have a total of about AU$1.5 trillion in deposits.

If our central bank printed that much and handed it over to the depositors, hyperinflation would begin overnight! And as for the US entity the FDIC, it has funds about 10% of the possible liabilities.

JMO


OC
 
The $250k guarantee wouldn't cover a systemic financial crisis spanning all banks:

Against some $950 billion in insured deposits, Australia's FCS makes provision for paying out only $20 billion in insurance on deposits in any single troubled bank, even though each of the Big Four individually has around $200 billion in insured deposits. Even the Australian Prudential Regulation Authority (APRA) and the FSB have observed that this level is woefully inadequate for the eventuality of a failure of any of the Big Four banks. As recorded in the minutes of the Australian Council of Financial Regulators 19 June 2009 meeting, when discussing the deposit guarantee scheme "APRA noted failure by one of the four largest institutions would be likely to exceed the scheme's resources." The FSB's own 21 September 2011 Peer Review of Australia Report stated, "The limit of $A20 billion per ADI [Authorised Deposit-taking Institution] would not be sufficient to cover the protected deposits of any of the four major banks"
 
"How many $$$$ in Derivatives?"

AFAIK, they are not covered. Do not know much about them but I think they are a contract? between 2 banks and they will live or die by them. Every one of them has the 2 parties and one will win and one will lose.

Hopefully they will all balance out, but maybe not.

OC
 
An interesting thread, this one. Getting back to the OP, the nervousness could well have been real, but not because the branch didn't have enough Aussie Beer Tokens in the drawers. This little scene says more about the nature of high street banks these days, and their business model. Long gone are the days when banks and bank managers were upstanding pillars of our communities, upon whom we could rely for some reasonably reliable advice. Nowadays, they are just another business whose survival and profitability depends on extracting as many dollars out of its customers as possible, usually by upselling products we don't need and didn't ask for. Bank staffers often get commissions for this stuff, and everybody will have KPIs and bloody targets in their APAs. I can feel the will to live slipping away as I think about this crap.........

Anyways, one KPI is probably to minimise withdrawals, so the poor lad/lady in question would have sat in the following day's staff meeting and been asked to explain why she had paid out $xxxxxxx in one day, as though she should have avoided it somehow.

Geez, I'm so glad I'm headed for the exit, work-wise. Just five more years........
 
SS,

Bank branches operate on the expected minimum amount of cash needed on hand for the days operations.

That increases the amount of surplus they have to channel into the Short Term Money Market that evening. Not much return at maybe 1.5%, but it adds up over the entire Bank over a full year.

And the short answer for the OP is that NO bank anywhere can withstand a full on 'Run'. The Reserve is about 12% and the other 88% is out on loan.

They ALL 'borrow short and lend long".

OC
 
Old Codger said:
"How many $$$$ in Derivatives?"

AFAIK, they are not covered. Do not know much about them but I think they are a contract? between 2 banks and they will live or die by them. Every one of them has the 2 parties and one will win and one will lose.

Hopefully they will all balance out, but maybe not.

OC

Credit Default Swaps...Insurance against a loss!

Regards Errol 43
 
Midastouchofgold said:
I made a withdrawal from one of the big 4 today for a few K, and the woman seemed nervous, or perhaps even scared that I was getting money out. Thinking about it later, I pondered the possibility she was scared because they did not have enough real cash to hand out in the event depositors came to get their money. And then I found this article from about a year ago-

http://www.abc.net.au/news/2015-07-14/australian-banks-need-to-increase-capital-reserves/6617910

Thoughts?
Maybe if you act more friendly ppl would be less nervous / scared.
Just saying don't be mad at me now.
 
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