from Gold Core:
Bank ‘bail-ins’ and the new international bail-in regime that impose losses on bank investors, bondholders and even depositors may undermine the confidence of small savers in the banking system, a senior Bank of Italy official warned on Wednesday.
Protect Your Savings From The Wrecking Ball
“The bail-in can exacerbate – rather than alleviate – the risks of systemic instability caused by the crisis of individual banks,” Carmelo Barbagallo, head of supervision at the central bank, astutely noted during a hearing before the Chamber of Deputies in Italy according to Reuters:
“It can undermine confidence, which is the essence of banking; transfer the costs of the crisis from taxpayers at large to a smaller category of people no less worthy of protection – small investors, pensioners – who directly or indirectly invested in bank liabilities” said Barbagallo.
The comments are notable as they are the first time that a central bank official in the EU, and indeed, internationally has voiced concerns about the coming bail-in regime and the impacts on ordinary citizens – small businesses, investors, savers and pensioners.
Central bank supervisor, Barbagallo is an interesting character in that he does not appear to be your typical central banker – most of whom today seem to be career bankers with Goldman Sachs and other Wall Street or City of London bankers. Indeed, his background is as a worker who rose through the ranks to become a senior trade union official.
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