The euro, stocks and other risk assets took a roller coaster ride after a European official’s comments sparked fear that the new normal in Europe will now be that regulators look to a bank’s own customers to help with any bank bailout.
The S&P 500 was rallying within a half point of its all-time closing high early Monday on the Cyprus bailout deal, but comments from Dutch Finance Minister Jeroen Dijsselbloem sapped the market’s gains and sent the euro and bank stocks skidding. Dijsselbloem was quoted as saying that future bank restructurings could seek funds from uninsured depositors, among other measures, suggesting to already nervous investors that any European institution could grab depositor funds.
“If the bank can’t do it, then we’ll talk to the shareholders and bondholders, we’ll ask them to contribute in recapitalizing the bank, and if necessary the uninsured deposit holders,” Dijsselbloem was quoted as saying in the Financial Times and on Reuters.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.