Patrick Barron:
From today’s Open Europe news summary:
The Times reports that the continuing eurozone crisis has compelled Royal Dutch Shell to withdraw some of its substantial cash reserves from European banks, intensifying fears of capital flight from the eurozone. Separately, the FT reports that in addition to reducing their net exposure to troubled eurozone countries, US banks have been working “behind the scenes” to ensure that if a country leaves the eurozone, they will not have to receive payments in its new devalued currency.
Times FT
This may be how the euro ends…large depositors and foreign banks pull their deposits, creating a liquidity crisis that the ECB tries to paper over with even more funny money…which merely causes even more depositors to pull their deposits until the euro loses its value completely. This is called an old-fashioned bank run, which exposes the fraud of fractional reserve banking.