Deposit War is a high risk bank stability

If no measures are taken, deposit War will become a risk to the stability of the banking system, „said Andrea Casini, Chief Operating Officer of UniCredit Bulbank BCCI meeting last night.
Deposit war, which is due to competition for scarce domestic savings, not only threatens the ability of banks to absorb losses from the recession but also the stability of the whole system. Among the consequences Casini pointed out obstacles to the introduction of the euro (Bulgaria does not fulfill the criteria for long-term interest) and increasing the level of bad loans as a result come to raise interest rates on loans will lead to inability to serve them. In the worst case scenario it may be necessary to save the banks.
Casini pointed out that banks do not carry the increased cost of financing to customers and continue to reduce the spread between interest on loans and deposits and thus bear part of the cost of your account. In April this spread fell to 5.38 percent at 6.18 percent a year ago.
According to him, government can help by providing liquidity and reducing costs of care obligations. Currency board does not exclude the possibility to start managing to keep a limited quasi monetary policy as part of the fiscal reserve is deposited in the banks as an incentive for increased lending, he said.
According to him there is no risk of increased liquidity to be exported as a few weeks the ECB flooded the market with 444 billion euros.

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Finance