Where to Turn When Your Bank Lets You Down

Youve just enjoyed your dinner at a restaurant.

You are ready to go, so you ask for the bill.

But, when you tap your bank card…it doesnt work.

Thats odd, you think. You know there is money in the account.

You try to log onto your bank account to check it…but the system keeps giving you an error message.

So, you decide to go to an ATM to get cash…but the ATM isnt working either. You try another one, and the same happens.

Banks are closed. What do you do?

Panic starts to set in. Where is your money? And, why cant you access it?

Its an unsettling feeling. You have worked hard for your money, and entrusted it to your bank. But now, you cant access it.

Something similar happened to Wells Fargo customers — an American bank — recently. They couldnt access their accounts last Thursday, and they were still having problems on Friday.

You may think that having trouble accessing your money is something that doesnt happen often. But it happened to my family in Argentina during the 2001 credit freeze. It happened to the population in Cyprus in 2012–13.

And, its something that could very well happen here in Australia too.

In a recent report by the OECD, one of the key recommendations for Australia was to prepare contingency plans for a possible significant correction in the housing market including a loss-absorbing regime (including bail-in provisions) in the case of financial-institution insolvency.

A bail-in is when creditors and deposit holders take a loss to rescue the banks.

Luckily for Wells Fargo customers, the problem only lasted for two days. My family couldnt access their savings for years.

While Wells Fargo customers were understandably fuming, it gave crypto supporters more ammunition for their argument for a decentralised network. As Fast Company reported:

With Wells Fargo customers unable to access their accounts Thursday after a power shutdown at a bank facility, cryptocurrency advocates on social media quickly argued that their coins decentralized networks can better withstand such problems.

JP Morgan recently released a report. According to the bank, they only see cryptos useful when there is a dystopian scenario. As Business Insider reported:

We have long been sceptical of cryptocurrencies value in most environments other than dystopia, characterised by a loss of faith in all major reserve assets (dollar, euro, yen, gold) and in the payments system, JPMorgan analysts wrote in a note dated January 24.

Their boom-bust cycle is similar to the path of gold in the early 1970s, the Nikkei in the 1980s and technology stocks in the 1990s, the analysts wrote.

However, the fact that cryptocurrencies still have a relatively limited correlation to traditional assets could be a positive for investors seeking to diversify. Despite that, Bitcoins co-movement with some markets like US equities and EM Bonds (local currency) has risen slightly since early 2018, but remains quite low, according to JPMorgan.

But, we disagree.

Arent we already living in a dystopian economy?

Our paper money has no relationship to the real economy…its tied to nothing. Debt has ballooned, interest rates have been unusually low for a very long time. The unemployment rate is low, yet salaries arent increasing. And asset prices ar ...

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Tags: Wells Fargo, Bank, Fast Company, OECD, Cyprus