The British keep trying to postpone the deadly austerity blow of a “full bank bail-in system” until they have seized full political control of the resulting collapse by nuclear war confrontation.
The Financial Times reported April 13 (“Brussels scuppers BoE bank lifeline”) that London was thwarted in its first attempt, last week, to escape from full bail-in. The Bank of England made the bald claim that it had “not noticed” until April 7 that the March 20 EU Financial Ministers’ agreement to a full bank bail-in system does not allow central banks to give “emergency liquidity assistance” (ELA) to “struggling” [i.e. insolvent] systemic banks, without implementing a full bail-in and seizing unsecured creditors’ money. The BoE tried to “clarify” that it could and would continue ELA bailouts, but ironically met Dutch, Finnish, Czech, and German opposition. In a sudden falling out among the thieves of depositors’ and investors’ funds, European Commission officials said that London’s crafty move to retain bailout, while pushing everyone else to full bail-in, had created chaos and “a nightmare situation”.
The FT makes clear that the BoE is still refusing to abandon ELA to London banks in trouble. “Officials involved in the discussions say they are confident the BoE can still provide emergency liquidity assistance (ELA)”; and that with UK Treasury backing for the BoE lending. They claim they must do this because London’s banks are so large.
The important background is that the BoE’s current view is that bail-ins of large systemic banks, as of now, are unworkable, and that failing SIFI’s cannot be resolved. This was stated by Deputy Governor John Cunliffe as the BoE’s view, in a speech to a London Chatham House conference March 16. And Bank of England Chairman Mark Carney, speaking on April 4 in his capacity as head of the international Financial Services Board (FSB) of the Bank for International Settlements, said that the FSB’s plan for “successful” bail-in would only be ready by the end of 2014.