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BSP MP: Central Bank, DPS, GERB Wanted 'Bank Holiday'

Business » FINANCE | July 6, 2014, Sunday // 15:12| Views: 1871 | Comments: 2
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Bulgaria: BSP MP: Central Bank, DPS, GERB Wanted 'Bank Holiday' Rumen Gechev. Photo: BGNES

Last Saturday the Movement for Rights and Freedoms (DPS), GERB and the Central Bank wanted to temporarily suspend the operations of all banks in Bulgaria, said Rumen Gechev. 

According to the Bulgarian Socialist Party MP, quoted by the Bulgarian National Radio, the idea was floated amid the bank turmoil and panic surrounding the First Investment Bank. Gechev, who was present at the meetings among representatives of BNB, the parliamentary represented parties and the Bulgarian Bank Association, said BSP and the bank association opposed the idea. 

“By noon last Saturday the most likely outcome was the introduction of partial suspension of operations of all banks in Bulgaria until the situation calmed down,” Gechev told BNR. “But BSP opposed it.”

According to the business weekly newspaper Capital, the idea was supported by BNB, DPS, GERB and representatives of the First Investment Bank and the Central Cooperative Bank. The initial proposal was for temporary closure of all banks. Later was discussed the option to impose limitation on cash withdrawals and bank transfers “until the elections”.

Sources of Capital confirmed that Gechev, who was a Minister of Economy during the bank crisis of 1996, firmly opposed the proposal, but his motives were mostly political, fueled by fears that someone might make a parallel with the 1996 situation. 

The representatives of the banks with international ownership firmly opposed the “bank holiday” and said thy were not willing to risk the stability of the entire sector because of two banks. They also said finding similarities with the situation in 1996 was absolutely unsubstantiated and the current situation was completely different.

Eventually, according to Capital, at the Sunday meeting with President Rosen Plevneliev, was decided that Bulgaria issues an extraordinary emission of government bonds in support of the stability of the banking sector. Meanwhile, the European Commission approved a liquidity support scheme for the Bulgarian banks.

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Tags: Rumen Gechev, Bulgarian Bank Association, BNB, GERB, DPS, BSP, First Investment Bank, suspension, bank, operations, withdrawals, bank transfers
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» To the forumComments (2)
#2
Optimistic - 6 Jul 2014 // 21:15:33

The Socialists have kept the banks open. Closing them temporarily would have been a diaster and caused a crises on a much larger scale.

#1
Philippe - 6 Jul 2014 // 19:34:44

“By noon last Saturday the most likely outcome was the introduction of partial suspension of operations of all banks in Bulgaria until the situation calmed down,” Gechev told BNR.

If this is not true, 10 years for this guy! :-)

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