We are currently experiencing one in Germany inflation rate, reminiscent of the early 1990s. These are bad conditions for the safety of your money at the bank, as we want to explain briefly. The connection will become clear to you very quickly.
Cheap money, big debt
The high inflation rate is due to the cheap money that has been available in Germany and the entire euro zone for many years. The low interest rates have led to a huge expansion of credit, which in turn inflates the money supply. Loans that are managed as electronic credit can be used immediately as money – for example via EC cards. As a result, more money is available through credit than before, which in turn has fueled prices.
But the decisive factor is the situation of the banks. The banks as a whole will have issued significantly more loans over the past few years than before. Collateral was taken out to cover the value of the loans, for example in the form of real estate. Their price development has in turn been controlled and influenced by the high money supply, i.e. a bit too high.
If the central banks should now raise interest rates a little because of the high inflation rate, you will probably experience numerous loan defaults. This primarily affects the banks, which at least have to reckon with the fact that the real estate values deposited as collateral will then also fall. The scenario of a high inflation rate, a real estate bubble that is at least halfway visible and high bank loans endangers some banks.
This will not only be visible in Germany, but also in other EU countries, for example in Italy, presumably also in France or in Spain. Many of you have deposited money, often in the form of money market accounts, with foreign banks. It will soon be interesting for you: How safe is the money actually?
Bank balances of 100,000 euros are secured at all banks whose states have joined the regulations of the European Deposit Protection Fund. In the event of insolvency, these security systems have to step in and pay you out.
Unless the entire system collapses, there will be no difficulties with this repayment in the foreseeable future. Therefore, you should always pay attention to the state-required deposit protection fund – and then you can lean back.
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