Albania pyramid schemes in 1997 scenario
Posted by franksupa on October 22, 2008
States throughout the Balkans are taking measures to reassure citizens that their bank deposits are safe amid fearful memories of the 1990s collapse of banking systems or failure of so-called pyramid schemes.
In response to growing tensions following the world financial crisis, the Serbian government announced on Monday it would guarantee deposits up to 50,000 euros (40,250 dollars), comparing to 3,000 euros until now.
Belgrade officials argue that Serbia has been largely preserved from any devastating effects of the world crisis.
Analyst Nebojsa Savic said it was good that the Serbian authorities reacted quickly and urged them to do their utmost to ‘calm down instability and prevent panic.’
‘Even the best financial systems would suffer serious problems if all clients withdrew their deposits at the same time,’ Savic said.
The Serbian government also decided to abolish tax on interest rate income until the end of 2009, as well as gains on shares and bonds until 2012. Croatia has taken similar measures last week, increasing banking deposit guarantee from 19,000 to 56,000 euros.
In Bosnia, the Central bank demanded the authorities to double a limit for the guarantee to 7,700 euros in a bid to win again the savers’ confidence in the local banking system.
In most of the countries emerging after the break up of former Yugoslavia, citizens were deprived from their deposits in early 1990s following the collapse of banking system.
Ever since the removal of the autocratic regime of Slobodan Milosevic in 2000, Serbia has been repaying the debt to its citizens in annual instalments.
Acknowledging that people are worried, Serbian Central bank governor Radovan Jelasic described as ‘irresponsible’ those who tried ‘to compare the banking system in Serbia nowadays with the one in 1990s that took away savings from citizens.’
He said: ‘At the time, those were state-owned banks in which the government appointed its own people, decided on investments and has played with somebody else’s money, while today the banks in Serbia are owned by first-class investors who can not be ordered by the state where to invest the money.’
The governor insisted that the banks in Serbia ‘stand’ behind citizens’ savings, insisting that they were ‘liquid and solvent.’
He said: ‘Second in line is the central bank, which keeps 40 percent of all deposits, more than in any other state in Europe, and finally the state, which pays back old deposits and (gives) guarantee for new ones up to 50,000 euros.’
The governor urged the citizens ‘not to trust those who are playing with their emotions and memories of the past.’
In Montenegro, Serbia’s former federation partner which had seceded in 2006, the local press has given widespread coverage to people’s concerns about the latest financial crisis, remembering the collapse in the 1990s.
The authorities want urgently to pass a law that would guarantee both individual and enterprises’ banking deposits. The state will also guarantee inter-banking loans, Financial Minister Igor Luksic said.
In Albania, where collapse of pyramid schemes in 1997 led to an armed rebellion, Prime Minister Sali Berisha told AFP that the ‘deposits of the Albanians in banks working in Albania are safe.’
Pyramid schemes are investment or saving plans which offer high returns. But the returns are largely funded by newly deposited money. The schemes therefore depend on attracting ever more depositors and are unsustainable.
The International Monetary Fund’s office in Tirana said ‘there is not a single worrying sign at this stage’ in the banking sector.
The country was less integrated to the world’s economy and therefore ‘somehow a bit protected’ from the ongoing financial crisis, it said.
In Macedonia, Deputy Prime Minister Zoran Stavrevski urged citizens ‘not to be afraid’ as banks based in Skopje were ‘only a little’ affected by the world crisis.
source:thanks to business.asiaone.com
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