Banks Hiding Cash As The System’s Cracks Widen

Banks Hiding Cash As The System’s Cracks Widen

German financial institutions are packing private vaults full of depositors cash to offset the mounting price of negative interest rates from the ECB, and now some of the biggest Vaulting facilities are running out of the room and telling banks they can not secure their bags of paper FIAT.

In December 2019, German banks increased their cash holdings to 43.4 billion euros (48 billion USD) according to the German central bank (Bundesbank) data published last Friday. That’s almost three times the amount since mid-2014, the month before the European Reserve bank began billing for down payments and increasing the pressure on Germany’s already beleaguered banks.

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German financial institutions held a record quantity of physical fiat cash at the end of 2019
Source: Bundesbank

Last years international trade disputes caused the economy to weaken. This has pushed the ECB to lower interest rates in another show of monetary manipulation, trying to entice individuals and companies to borrow more. The more borrowing, the more it enables the ECB to print money, intern feeding the inflation beast. Banks, in general, rely on the income gained from interest rates on loans and so don’t want to lose that revenue by paying the ECB its negative interest rates

“These days it is better to keep funds in cash rather than park them at the European Central Bank. That’s despite the insurance costs, risks & logistical hassle involved. It is a ludicrous demonstration of the consequences of the ECB’s ‘negative’ interest-rate policy.”

Andreas Schulz from a Berlin Savings and Loans bank

Pro Aurum, one of the Vaulting facilities Vaultoro uses to secure our customers Gold, is one of the largest and most secure vaulting facilities in Europe. They have obtained several requests from financial institutions to secure piles of fiat Euro notes in its vaults. Pro Aurum had to turn them down because of an absence of capacity.

“The ECB’s negative interest rates make hoarding fiat cash attractive; this is just the beginning. If it continues, we’ll see a boom for vaulting and security companies.”

Frank Schaeffler, a German member of parliament

Taking down payments for loans is the primary business model of retail banks around the world. Now European banks are flush with cash liquidity, and apparently, they don’t lend it all out as credit. So what do they do with all that cash? They have to secure it somewhere where they don’t pay a percentage of all value like they have to at the ECB. The European banks are left looking for a way to not having to pay the negative interest rates on about 3 trillion Euros! German banks alone are expecting to pay the ECB around 2 billion euros a year.

The largest banks in Germany (Deutsche Bank and Commerzbank), are trying to deal with the blowout that the European central bank’s crazy inflationary stimulus experiment is having. The banks are doing this by firing thousands of workers to deal with the negative interest rates and the disruption that the Fintech sector is doing to their bottom line.

Other measures include, of course handing down the costs for deposits to companies, high net worth individuals and family offices. Doing so is seeing a massive spike in sign-ups on Vaultoro’s sister company Bar9 GmbH. Bar9 is an OTC desk to buy, sell and secure insured and audited gold bullion in private Vaults.

“We’re seeing an influx of new clients sign up to Bar9 to secure their wealth in gold rather than fiat,” said Scigala

We reached out to a new member to ask why they were using instead of a bank. “Why pay a bank negative interest rates just for the privilege of allowing them to speculate with my money? I would rather pay the same to hold physical bullion that I know is just sitting there and not being speculated with, gold is also in a mad Bullrun if you haven’t noticed.”

Scigala commented, “It’s a no-brainer, both Super wealthy and the middle-class from all over Europe are opening vaulting accounts at bar9. This is a testament to the fact that banking is not trusted anymore, especially when people and institutions have to pay negative interest rates on their savings rather than earning interest,”

Germans have a coulture of saving and so are struck harder than the majority of other Europeans. they stay clear of riskier items that attract banks fees. The country’s savings rate was around 10% in 2017, virtually two times the rest of the euro-area average. Acording to DZ Banks, last year, of their 6.6 trillion euros, Germans held only 21% in mutual funds, bonds and shares, the rest is sitting as cash savings! MADNES!

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Source: DZ Bank, German savings estimates for 2019

The volume of fiat that banks have to hord away is little compared with the down payments they hold from German Borrowers. The situationis fuel for critics of the ECB, that say thier policy of negative interest rates and money printing are not stimulating the economy anymore but simply corroding the shaky banking sysem further .

Germans are very well known for their love of physical money like Gold and Silver as well as general privacy, so it’s no wonder that companies like Bar9 see Germans pile in to save their money in Gold rather than in fiat cash


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Joshua Scigala
