4 ms·

Here's something I don't understand. It's probably more relevant to a country Greece's size than the US: Why isn't consumer banking more international, like ev

by netcan 11y ago

Here's something I don't understand. It's probably more relevant to a country Greece's size than the US: Why isn't consumer banking more international, like every other major industry? In Greece, interlocking government & bank failures have brought down the country and it's causing this seized up state. People are now afraid of leaving money in a bad banking system. So banks have no deposits, and can't provide financial services. But, if Greeks had easy access to large & stable foreign banks they wouldn't need to worry about the sorry state of Greece's own banks. I mean, if Greece's local canning industry had collapsed they would be buying foreign canned goods and everything (at least on the consumer side) could continue undisturbed. What is the big advantage of a local banking industry anyway?

zo1 11y ago
It's not about advantage/better. It's all about regulation. I.e. You simply can't bank across a border due to all sorts of regulations and laws. And I think that applies to both sides of the fence, both on the Greece side, and on all the "foreign" countries that you think can provide a "global" service to the Greeks. The bank and the state are intertwined due to this, and any failure on one will most likely affect the other. This will be the case until a true free-market approach is taken by banks. Are there decent middle-grounds between regulation and free-market? Sure, things could chug along.
- rjtavares 11y ago
  That's the whole point of having a single currency and a common market... I should be able to open an account in any Eurozone bank without much trouble.
- SturgeonsLaw 11y ago
  > You simply can't bank across a border due to all sorts of regulations and laws I wonder how many people told Travis Kalanick you simply can't start a taxi competitor due to all sorts of regulations and laws
- tim333 11y ago
  >You simply can't bank across a border In my experience that varies. I have bank accounts in the UK, US, and Spain and in terms of saving money and transferring it there's usually no problem. Where it is localised is borrowing money against property. If you want a mortgage against a Spanish flat you have to use a Spanish bank and so on. That kind of makes sense as if you run off and don't pay the mortgage then the bank is stuck with the property and it's easier to deal with one down the road where you know the laws and regulations than one in some random other country. Especially if evicting tenants and so on is involved, things get pretty complicated.
  - zo1 11y ago
    Okay, but let's assume this in the context of Greece. I understand that everything sorta "works" semi-smoothly when everything is fine. I too have managed to move money over borders, between accounts, etc. But in the context of the Greek situation? I.e. Imagine someone wanting to come in now (or at the start of the crisis?) in order to open up a new "foreign" bank and offer it to Greek individuals? Because the regulation is so intertwined, and this mess of the loans and ECB, means that no one dare do that. They'd have to jump through mountains of regulation, come up with some sort of initial capital to fund the bank (with no idea whether they could have legal access to it again), and on top of that all, give the new Greek depositors any sort of guarantee. A tall order, to say the least. Another point, sorta tangential. You can also barely have an "informal" bank by virtue of transferring money to a foreign bank. Have a look at: https://en.wikipedia.org/wiki/Hawala https://en.wikipedia.org/wiki/Hawala I haven't confirmed, but I'd bet that almost every single country in the world defines that sort of transfer as illegal. Or additionally: https://en.wikipedia.org/wiki/Foreign_exchange_controls https://en.wikipedia.org/wiki/Foreign_exchange_controls
cynicalkane 11y ago
There isn't. You want your banking industry to be the same size as your currency area, because central banking is by far the most important tool of financial stability.
tim333 11y ago
>if Greeks had easy access to large & stable foreign banks they wouldn't need to worry about the sorry state of Greece's own banks Trouble is that's not so. If people just stopped using Greece's banks they'd go bust and then either the government would have to bail them out or savers would lose their money. As to why have a local banking business, the bulk of useful banking is lending to local businesses and people getting houses so there's a benefit to being local so you know the people, businesses and houses. Of course it needs to be regulated so they don't take your savings and punt it on dumb stuff.
douche 11y ago
Someday I hope that we get to having a global currency, and a lot of these issues go away. It is kind of ridiculous the delays and barriers that the banking system still has in place - I have direct deposit for my paychecks, and my employer uses electronic payments to move the cash into my accounts. It still takes at least two business days for funds to clear in my account. This is all domestic, with banks that are physically 20 miles apart.

by netcan 11y ago

zo1 11y ago

It's not about advantage/better. It's all about regulation. I.e. You simply can't bank across a border due to all sorts of regulations and laws. And I think that applies to both sides of the fence, both on the Greece side, and on all the "foreign" countries that you think can provide a "global" service to the Greeks. The bank and the state are intertwined due to this, and any failure on one will most likely affect the other. This will be the case until a true free-market approach is taken by banks. Are there decent middle-grounds between regulation and free-market? Sure, things could chug along.

rjtavares 11y ago
That's the whole point of having a single currency and a common market... I should be able to open an account in any Eurozone bank without much trouble.
SturgeonsLaw 11y ago
> You simply can't bank across a border due to all sorts of regulations and laws I wonder how many people told Travis Kalanick you simply can't start a taxi competitor due to all sorts of regulations and laws
tim333 11y ago
>You simply can't bank across a border In my experience that varies. I have bank accounts in the UK, US, and Spain and in terms of saving money and transferring it there's usually no problem. Where it is localised is borrowing money against property. If you want a mortgage against a Spanish flat you have to use a Spanish bank and so on. That kind of makes sense as if you run off and don't pay the mortgage then the bank is stuck with the property and it's easier to deal with one down the road where you know the laws and regulations than one in some random other country. Especially if evicting tenants and so on is involved, things get pretty complicated.
- zo1 11y ago
  Okay, but let's assume this in the context of Greece. I understand that everything sorta "works" semi-smoothly when everything is fine. I too have managed to move money over borders, between accounts, etc. But in the context of the Greek situation? I.e. Imagine someone wanting to come in now (or at the start of the crisis?) in order to open up a new "foreign" bank and offer it to Greek individuals? Because the regulation is so intertwined, and this mess of the loans and ECB, means that no one dare do that. They'd have to jump through mountains of regulation, come up with some sort of initial capital to fund the bank (with no idea whether they could have legal access to it again), and on top of that all, give the new Greek depositors any sort of guarantee. A tall order, to say the least. Another point, sorta tangential. You can also barely have an "informal" bank by virtue of transferring money to a foreign bank. Have a look at: https://en.wikipedia.org/wiki/Hawala https://en.wikipedia.org/wiki/Hawala I haven't confirmed, but I'd bet that almost every single country in the world defines that sort of transfer as illegal. Or additionally: https://en.wikipedia.org/wiki/Foreign_exchange_controls https://en.wikipedia.org/wiki/Foreign_exchange_controls

cynicalkane 11y ago

There isn't. You want your banking industry to be the same size as your currency area, because central banking is by far the most important tool of financial stability.

tim333 11y ago

>if Greeks had easy access to large & stable foreign banks they wouldn't need to worry about the sorry state of Greece's own banks Trouble is that's not so. If people just stopped using Greece's banks they'd go bust and then either the government would have to bail them out or savers would lose their money. As to why have a local banking business, the bulk of useful banking is lending to local businesses and people getting houses so there's a benefit to being local so you know the people, businesses and houses. Of course it needs to be regulated so they don't take your savings and punt it on dumb stuff.

douche 11y ago

Someday I hope that we get to having a global currency, and a lot of these issues go away. It is kind of ridiculous the delays and barriers that the banking system still has in place - I have direct deposit for my paychecks, and my employer uses electronic payments to move the cash into my accounts. It still takes at least two business days for funds to clear in my account. This is all domestic, with banks that are physically 20 miles apart.