Kai Ryssdal: There's a big meeting in Europe later this week. I'd tell you what it's about, but you already know, right? The economy over there, and how to get it going again.
Until that happens, the big worry is the banks. A run on them, to be specific. That'd be a very bad thing. There were rumblings of one last week in Greece.
Didn't actually happen, but if it did, deposit insurance woulnd't be much of a help. From the European Desk in London, Marketplace's Stephen Beard reports.
Stephen Beard: The Europeans do have deposit protection, much like the FDIC provides in the States. They can put their money in the bank, safe in the knowledge that it’s guaranteed by government-backed insurance.
But that’s not entirely reassuring in the eurozone, says Jeffrey Wood of Cass Business School.
Jeffrey Wood: A lot of these governments are bust. In Greece, that government couldn’t pay. I doubt very much that the Portuguese could pay and the Spanish would struggle.
Depositors in Greece have been cashing in their accounts not because they fear their bank will blow up. Alex Potter of the Berenberg Bank in London says they’re worried that Greece will be expelled from the eurozone.
Alex Potter: The likelihood would be that the Greek government would forcibly convert euros held within banks to presumably –- back to the drachma and that currency will probably devalue further from there.
Better then to get your cash out of that Greek bank now, out of the country or even under the mattress, before it’s transformed into lowly drachmas. The only deposit protection insurance against that would be a pan-European guarantee of all eurozone bank accounts, with a potentially huge pay out if things went wrong.
Potter: So this isn’t -- as the FDIC works -- the issue of isolated small banks going bust and having to bail out small amounts of money on an ongoing basis. This would be one gigantic hit very early on.
A pan-European deposit protection scheme would need to be approved primarily by the country which would foot most of the bill -- Germany. Any signs that the Germans could be up for it?
Wood: I’ve yet to see a pig flying past my window. You might have.
In London, I’m Stephen Beard for Marketplace.