by Mark Johnston
As Greek voters go to the polls in elections that could determine the future of the euro zone, the head of the World Bank, Robert Zoellick, is advising emerging nations to ready themselves for the consequences of events in the single currency area.
A disorderly euro zone break up could potentially spark another deep recession comparable to that caused by the previous banking crisis in the UK.
In light of issue inGreece, the Spanish government have reiterated assurances that they did not require an international bail out, despite this now being seen as inevitable by many financial experts.
Experts believe that given the volatility in the world economy, there is a big emphasis on helping develop social safety nets that will not ‘push the budget’.
The insurance market Lloyds of London is preparing contingency plans for the possibility of the euro collapsing.
Also just recently, David Cameron, the Prime Minister, hosted a meeting with Sir Mervyn King, governor of the bank, Lord Turner, the chairman of the Financial Service Authority (FSA) and the chancellor, George Osborne, to discuss contingency plans for theUKto deal with as euro zone break up.
Consumers in the UK are worried increasingly worried about their money amidst the euro crisis and also due to what happen to some banks when the financial crisis hit in 2008.
Andrew Bailey, the Financial Service Authority’s (FSA) director ofUKbanks and building societies, said “customers need to feel confident about their money”.
The regulator has insisted that financial institutions must now make greater efforts to tell savers how much money they will get back in the event of them going bust.
Therefore the Financial Service Authority has already informed all banks an building societies that they need to display prominent notices in branches and on their websites to explain how customers money is protected, this rule will take effect this year on August 31st.
Under the Financial Service Compensation Scheme (FSCS) savers would get all their money back up to a total of £85,000, the total is doubled for joint accounts.
However some Europe based financial institutions such as ING Direct, while trading in theUKand still being regulated by the Financial Service Authority (FSA), are actually covered by the schemes in their own countries, meaning their maximum payout would be around £80,000, £5,000 less than theUK’s scheme.
It seems that too many consumers assume that because their branch is located on a local high street in theUK, they are covered by the Financial Service Compensation Scheme (FSCS) but this is not the case.
The exception to this is Santander’s UK business as it is autonomous from its Spanish parent and therefore it is covered under theUK’s scheme.
Some economists have indicated that the financial markets may already be overreacting to events inEuropeat this present time.
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