BIS Lays Out the BluePrint for Bail-ins

BIS
Source: DSNews

In the wake of the Cypriot depositor bail-in, DIESELBOOM let the cat out of the bag that the Cyprus depositor bank bail-in was the template for future bank crises across the Eurozone, a fact we quickly substantiated by uncovering bail-in legislation in the US, UKand Canada.
The banksters’ banksters (aka the BIS) have just officially confirmed what SD readers have known a full 3 months- and have released the official depositor bail-in blueprint!

 

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As Reuters reports, the BIS blueprint officially confirms the banksters plan to pursue the depositor bail-in model for future bank crises:

Central bank forum the Bank for International Settlements laid out a blueprint on Sunday for how to recapitalize a major lender in the event of a failure, seeking to avoid the sort of chaotic ad hoc rescues seen since 2008’s financial crash.


The BIS blueprint (for now at least) wisely restricts depositor haircuts to depositor funds in excess of deposit insurance levels, and would allow the failing bank institution to be re-capitalized by its creditors (ie depositors) over a weekend and reopen immediately on a Monday:

The BIS paper released on Sunday said its plan would allow banks to be recapitalized quickly and easily and would allow authorities to give an unequivocal guarantee that insured depositors would not lose savings.

“(It) proposes a simple recapitalization mechanism that is consistent with the rights of creditors and enables recapitalization of a TBTF bank over a weekend without the use of taxpayers’ money,” the paper said.

Under the template laid out by BIS, which is termed a creditor-funded recapitalization mechanism, the bank would undergo a forced recapitalization by its creditors when it reaches the point of failure.

The ownership of a bank would be transferred to a newly created temporary holding company over a weekend. The bank is then immediately recapitalized by writing off the claims of creditors.

 

While the BIS banksters would like to give the impression their blueprint is a natural bankruptcy resolution, even the Reuters reporters point out that the BIS’ bail-in model does not respect the creditor hierarchy (much less the fact that 99% of depositors would never consider themselves a creditor of the banking institution in which they deposit their funds):

The plan includes elements of other resolution methods, particularly the bail-in of creditors and a holding company resolution.

Europe is pushing ahead with plans to implement a “bail-in” regime that would see bondholders and big depositors take hits.

But the bail-in model does not fully respect the creditor hierarchy, as it can inflict losses on bondholders before shareholders have been fully wiped out, said the BIS report’s authors, Paul Melaschenko and Noel Reynolds.

 

In summary, less than 3 months after we broke the news and warned that The Fed, Bank of England, Bank of Canada, Italy, New Zealand, and essentially the entire Western banking system were planning on scalping depositors during the next banking crisis, the BIS itself has confirmed the fact.

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