Latvia's Banking System On The Verge Of COLLAPSE!

I usually look at world economic news every day. When Josh and I were in Acapulco, Mexico I saw news of Latvia's Central Bank being accused of money laundering and being thrown out as the chair. This story has now blown up into a full bank run on one of the biggest banks in Latvia ABLV. They have of course closed on Friday and soon stopped withdrawals. Most likely we are looking at a Bail-In, recapitalization or haircut as the names of it are. All of them means stealing your money to save themselves from insolvency!

Banks in Latvia are more solvent than most other banks. But even though ABLV had 13%+ Cash to Deposits, they are way better off than Canadian banks which had under 3% on an average. That should scare you when ABLV had over 450% more cash than most Canadian banks when it is failing from a bank run.

Latvia joined the Eurozone as the last country in 01st Jan 2014. It was a terrible mistake. Corruption and money laundering issues have been to blame for ABLV's failure, but there is more to it. The above is nothing compared to the Ponzi scheme the banksters have been running for the last 100+ years!

Let's take a look at how the top 4 Latvian bank is doing when it comes to cash holdings vs. deposits. Are there more significant risks than ABLV?

Norvik Banka 4.73%
Citadele Banka 24.59%
Rietumu Banka 28.85%
ABLV Banka 13.36%

As you can see Citadele and Rietumu seems to be a lot better capitalized than ABLV, but Norvik which is a Norwegian owned bank has only a third of deposits in a percentage of what failing ABLV has. It can be of significant risk if bank run continues and a contagion of capital flight from Latvian banks happen. It only remains to be seen if the trust is broken and if it is will it feed into the other struggling European banks that have less cash on hand than ABLV which is almost all European major banks!

It looks like the European Stabilization Fund or Single Resolution Board is not getting involved in saving the bank. Don't worry as the local Latvian Deposit Insurance Fund will cover banks accounts holding under $100k.

https://www.bankingsupervision.europa.eu/press/pr/date/2018/html/ssm.pr180224.en.html

Or should they worry? If the Latvian deposit insurance corporation were the same as the CDIC in Canada, they would only hold 0.39% of the insured deposits in their protection fund. The coming days will be crucial for what will happen next for European banks, and if things go really, bad ABLV could be a bank that could start the domino effect of the profoundly struggling Eurozone banks.

What I am trying to say is that banks around the world are barely alive and a minor loss of trust could evaporate enough capital to make any entities bankrupt in a matter of days! Check three of my blogs on banks here:

World Banks:
https://steemit.com/money/@theeconomictruth/is-your-bank-insolvent-bankrupt-will-you-get-your-money-in-a-crisis

Canadian Banks:
https://steemit.com/money/@theeconomictruth/are-canadian-banks-insolvent-if-people-withdrew-their-money-is-it-game-over

Canadian Credit Unions:
https://steemit.com/money/@theeconomictruth/canada-s-credit-unions-are-bankrupt-what-you-need-to-know-about-your-credit-union

The coming days could put the faith of the banking system in Europe on its bring as people start to understand the money they thought was theirs is not their but their banks and that the bank was running a fractional reserve system which was only able to work with trust!

If this breaks it is game over for the banking system and with potential coming capital controls coming to Latvia on Monday people might be fuelled to topple several other Latvian banks and cause a European and even a worldwide spread bank run which will mean the end of the trust in the Ponzi scheme!

Love, Peace and Voluntaryism,

John