Cyprus issues has just hit home after reading the blog below. Apprently NZ has new legislation in place to prevent a meltdown. I wonder if the same goes for RBA. As an avid Ozbargainers, I hope this post will help other ozbargainers be more aware of financial issues.
http://globaleconomicanalysis.blogspot.com.au/2013/03/fraudu…
Cheers
Kev go westie
correct me if I am wrong, but 2nd item mentioned here:
http://www.apra.gov.au/CrossIndustry/FCS/Pages/fcs-adi-html.…
covers Aus deposits.
yeah thats what most countries says until their major bank fail like Cyprus. the point is NZ is actually telling people the truth in the event of crisis and prepping them for it. most banks, it seems do not have enough assets to pay back all the deposit in the bank.
it's not that there aren't enough assets to match liabilities.
It's that many of their assets can't be called in for their full value immediately, which is what they'd have to do to survive a banking run. For example a home loan because 1)they legally can't call it in before its due because of the contract 2)even if they could call in the loan your average person isn't going to have the money to instantly pay down the total of their loan.
yeah thats what most countries says until their major bank fail like Cyprus.
Right…so banks that admit a problem have a problem, and banks that don't admit they have a problem also have a problem. Riiight.
If you really believe all this, you'll withdraw your money from the bank right now. Have you done this? Do you even understand what's happened in Cyprus?
i think i do, partially i guess. i am no financial guru or expert and i have no solution to this but i just want to share this matter with others. so blitz, whats your take on this ?
Unfortunately there is no way out.
All investments bear risks. It all depends on what risks are you comfort with. Usually State governments have the highest ratings, but look at Iceland, Cyprus. Let alone ratings are not trustworthy anymore from what we saw during GFC.
As long as you don't have the cash or actual commodity with you, the governemnt can do whatever they deem appropriate with your assets in the banks, although the chance is quite slim in Australia at the moment. Laws? Laws are there to be changed.
On the other hand, if you keep cash at hand, there is storage cost and depreciation, plus the risk of fire, eaten by mouse, and burglary, etc; Commodity has the similar issue and much more risk than keeping cash.
Lesser of the two evils, bank and the goverment is still most ordinary people's choice.
Inb4 someone mentions bitcoins.
if your computer gets hacked is there a risk to your Bitcoin account ?
Unless Aussie bank accounts get overrun by Russian oligarchs putting their money in our banks to take advantage of us as a tax haven and absurdly high 'guaranteed' interest rates then I don't think we have much to worry about.
If you put money in a bank, it is no longer your money, you have given it to bank to loan out.
Probably the best idea is to keep your money in the bank and when banking problems start to happen, take it as a early warning sign and withdraw all your cash. You could try using prosper or lendinghub.com.au and use peer2peer lending
Last I heard most of the banks in NZ are Australian owned … give it time and it will probably happen here, if not already.