Bank Run ~ (With a Twist)
Image by Roads Less Traveled Photography
Why are so many people lined up outside this bank? HINT: It has nothing to do with a free toaster. No, this is a good old (bad old?) Bank Run.
So, what happened? During the Financial Crises of 2008, many banks here where hit hard. Not that big a surprise to me, because when I saw numerous banks promising interest rates on deposits over 20%, it rang alarm bells for me. But for people over here, after the fall of the USSR, the associated financial turmoil that ensued, and years of financial mismanagement and hyperinflation, many over here might see this and think "Wow! I really love capitalism!" So, this has many singing a different tune now.
So, what’s the twist here? Although all these people are trying to get their money from this bank, they are limited to 150 hriven a day. That’s about .80 a day, or 13.15 euro. So people return, day after day to withdraw what they can while they can.
The government is promising that all depositors will be repaid in full. However, there are problems with that. In the summer of 2008, the government at that time resumed payments to people who lost money when the Soviet banking system collapsed with the fall of the USSR, 17 years before. Those payments made the Financial Crises of 2008 more severe for the government, leading to having to take loans from the European Development Bank and the World Bank. This also led to the end of the more democratic government and a return to a more authoritarian government.
Thoughts | Comments | Critiques | Questions ~ Always Welcome
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by Matt Shalvatis – Roads Less Traveled Photography
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