Germany's Bundesbank said on Monday that countries about to go bankrupt should draw on the private wealth of their citizens through a one-off capital levy before asking other states for help.

The Bundesbank's tough stance comes after years of euro zone crisis that saw five government bailouts. There have also bond market interventions by the European Central Bank in, for example, Italy where households' average net wealth is higher than in Germany.

"(A capital levy) corresponds to the principle of national responsibility, according to which tax payers are responsible for their government's obligations before solidarity of other states is required," the Bundesbank said in its monthly report.

It warned that such a levy carried significant risks and its implementation would not be easy, adding it should only be considered in absolute exceptional cases, for example to avert a looming sovereign insolvency.

The International Monetary Fund discussed the option in a report in October and said that reducing debt ratios to end-2007 levels for a sample of 15 euro area countries, a tax rate of about 10 percent on households with positive net wealth would be required.

The German Institute for Economic Research calculated in 2012 that in Germany a 10-percent levy on a tax base derived from a personal allowance of 250,000 euros would add up to around 230 billion euros. It did not give a figure for crisis countries due to lack of sufficient data.

Greece has been granted bailout funds of 240 billion euros from the euro area, its national central banks and IMF to protect it from a chaotic default and possible exit from the euro zone. Not all funds have been paid out yet.

In Germany, however, the Bundesbank said it would not support an implementation of a recurrent wealth tax, saying it would harm growth.

Recent reforms and adjustments in the euro zone's struggling

countries - Ireland, Greece, Spain, Italy, Cyprus and Portugal - have improved conditions for sustainable growth, the Bundesbank said, but remained concerned about high debt levels.

It was still a key challenge to drive down public as well as private debt and the ECB's upcoming bank health checks could help to address current problems in the banking sector.

A successful test could also help to wean banks in the euro zone periphery countries off ECB funding, the Bundesbank said.

"It is not the purpose of European monetary policy to ensure solvency of national banking systems or governments and it cannot replace necessary economic adjustments or bank balance sheet clean ups," the Bundesbank said.

Do folk even question how germany is in a position to even be calling shots like this?
What do people think led to germany having the strong economy they built?
Very few would even think to ask...

It is called a "bank deposit levy" and the one you refer to was called a "one off" which is laughable.

Many people shared such cynicism and this did a lot to encourage interest in the bitcoin as well as, according to Paul Krugman, potentially causing a run on the banks.

Be prepared for ATMs suddenly not working.

A banker has died after jumping 500ft from the top of JP Morgan's European headquarters in London this morning.
The man, who is believed to be 39, fell from the 33 floor skyscraper and was found on the ninth floor roof of the Canary Wharf building.
A source close to the investigation told MailOnline the man was a banker, but JP Morgan, the world's largest bank by assets, said his name and job would not be released until his family were informed.

A former Deutsche Bank executive has been found dead at a house in London, it emerged today.
The body of William ‘Bill’ Broeksmit, 58, was discovered at his home in South Kensington on Sunday by police.
Mr Broeksmit - who retired last February - was a former senior manager with close ties to co-chief executive Anshu Jain.
Mr Jain and co-chief executive Juergen Fitschen said in an internal memo: ‘He was considered by many of his peers to be among the finest minds in the fields of risk and capital management.'

@ Gilly....thank you.
This is now starting to get a tad uncomfortable......for me personally not because I have money to worry about...but the consequences of what's brewing.

The HSBC bank is limiting withdrawals in both the United States and in Britain

This development at HSBC should raise red flags for everyone, not just HSBC customers, because in the same time frame, JP Morgan Chase announced an identical policy. As a result, many financial analysts are predicting a bank run in the near future and this is the primary strategy of the banks as they are obviously bracing for an economic collapse.

Clearly, this is a portend of things to come. If the banks were on sound financial footing, account holders would not see any such restrictions. However, if you knew if a bank crash was coming, wouldn’t you make sure your bank was as liquid as possible? To the banks, being liquid and cautious in these perilous times means that the banks intend on making it very difficult for their customers to gain access to their money.

These are the chest pains before the heart attack. Take your money out of the bank while you still can.

I'm moving to Germany!!!

On a serious note, are their living standard better than ours? Their cars certainly are...

nonfictionalentity wrote:
No.

Its only fair to state that certain small states with specific high paid jobs and low tax rates have a higher living standard overall.

Eg.
Scandinavia, Ireland, Iceland, Switzerland, Luxembourg.

The rest of the countries are not much better and many actually even worse than the UK. I've met a few Germans and they have basically similar gripes as the Brits do.

Primarily better conditions are due to lack of taxation such as council tax, water bills etc. So its more about less going out than whats coming in. Also as underlined above, its only specific workers in certain jobs that are better off, it has to be a very focused like for like comparison to be worthwhile.

Eurogroup Working Group's leader Thomas Wieser has revealed that the the eurozone should introduce bank bail-in rules from 2016.

According to a report in German publication Der Spiegel, Wieser called on authorities in the European Union to bring forward the 2018 deadline for the bail-in policy, in order to strengthen the continent's banking system.

The EU has been trying to work out how it can shore up Europe's fragile financial sector that has been a major casualty of the sovereign debt crisis that erupted in 2010.

A bail-in is designed to protect taxpayers from rescuing a bank in the event of financial crisis. Before bankruptcy can be declared, under current proposals, a bail-in is designed to impose losses on bondholders while leaving untouched other creditors of similar stature, such as derivatives counterparties.

Exchange crashes and bank runs

Prof Richard Roberts, of King's College London, and author of Saving the City - the Great Financial Crisis of 1914, argues that the events of July and August were as bad as the City of London has ever seen, either before or since.

"In the week before Britain went to war all the London financial markets collapsed," he says.

A state of funk'

The debates in Parliament and in the City in 1914 bore an uncanny resemblance to those held in the aftermath of the bailouts of RBS and Lloyds/HBOS.

The concern about stigma being attached to those banks which went to the Bank of England to get access to emergency credit lines was voiced in 1914. Accusations that banks bailed out by the authorities were not lending to the wider economy were also heard.