Menu Close

Business – Matthew O’Brien – This Might Be the Dumbest Thing Europe Has Done Yet – The Atlantic

Rather impressively, the botched bailout of Spain’s banks wasn’t even the most incompetent thing Europe’s officials did on Monday. That honor goes to the guys who admitted that they have talked about instituting capital controls if Greece actually does exit the euro zone. Meaning: Europe will prevent people from moving their money across national borders — and perhaps even from withdrawing it from ATMs — if eurogeddon hits.

The first rule of capital controls is: Don’t talk about capital controls. The second rule of capital controls is: Just do them — secretly. Talking about them beforehand only broadcasts to everyone in Europe’s periphery that they should move their money to a German bank ASAP, as otherwise their euros could soon turn into pesetas or lira. Of course, if people start pulling their money out of their home banks en masse, the only solution might be capital controls …

In other words, talking about capital controls can set off a continental bank run that makes capital controls necessary.

via Business – Matthew O’Brien – This Might Be the Dumbest Thing Europe Has Done Yet – The Atlantic.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

RSS
Follow by Email
LinkedIn
Share