How a Private Vault Secures Your Assets From the Bank Bail-In Law
The passage of the Bank Bail-In Law in February, 2018 via a voice vote left many financial analysts and experts wary of its ramifications for all Australians; and for good reason.
In this article, we explore the Bank Bail-In Law, discuss why it is important to seek an alternative separate to the banking system, and briefly discuss how a private vault secures your assets from the Bank Bail-In Law.
The Bank Bail-In Law at a Glance
The Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Bill 2017 or the Australian Bail-In Law gives the Australian Prudential Regulation Authority (APRA) “crisis powers” allowing it to, among other things:
1. Secretly step in and run distressed banks;
2. Bail-in distressed institutions using the creditors of the bank instead of using taxpayers’ money filtered by the government;
3. Confiscate and write off certain types of bonds and hybrid securities;
4. Confiscate cash savings of self-managed super funds (SMSFs).
This puts depositors in a compromised position should banks in Australia come to be in crisis. Moreover, despite the existence of the government’s Guarantee Scheme and the depositor’s $250,000 guarantee under the Financial Claims Scheme, these are currently inactive and can only be activated by the Government at their discretion.
What’s more, if you store assets in a bank-operated safe deposit box, there is no guarantee that your valuables are safe, as the government has proven with Bank Bail-In Law to amend and pass legislation without warning. There’s no telling whether or not what happened in Cyprus in 2013, where the banks confiscated the deposits of clients, will also take place in Australia. Most seem to believe that it is only a matter of time.
Concerns Surrounding Bank Bail-In Laws
At its core, this piece of legislation brought Australia in line with the bail-in agenda of the Bank of International Settlements (BIS), which was agreed upon at the 2014 G20 Summit in Brisbane, Australia.
As reported by the HuffPost, the passing of the bill, “May have been the day deposits died as money,” as bank accounts and pension funds now stand the risk of being completely wiped out and sacrificed in the event that a major financial institution fails. Though the warning signs have been made clear over the past years.
In the wake of the Cyprus financial crisis, in 2013 Naked Capitalism criticised similar bail-in laws in the U.S. reporting that, “One of the big lessons of the fraught negotiations over bailing out (or more accurately, in) Cyprus’s banks is that deregulating institutions with an implicit or explicit state guarantee is a bad idea. You’ve just given them a license to gamble with the public’s money.”
The idea of converting the funds of depositors into capital, including your savings as an everyday depositor, has come under fire from individuals and organisations far and wide. The website Barnabyisright.com explained that, “A critical aspect of what the bail-in scheme is intended to do, is to prioritise the payment of banks’ derivatives obligations to each other, ahead of depositors. In other words, it is about stealing the public’s bank deposits…”
Private Vaulting vs. Bank Bail-In
While the combination of all-time low interest rates and returns on bank accounts, and the severely risky and compromised structure of the banking system is a frightening notion, there is good news. The major alternative that you have is the option to protect your investments by transferring your assets to a private safe deposit box.
With the advent of digital technologies such as online cloud storage systems and cryptocurrencies, you may question the relevance of private safety deposit box facilities as a service to secure, protect and build wealth. What’s important to note is that these private service providers ensure multiple levels of state-of-the-art security, shorter transaction times, insurance against theft or damage, and anonymous safety deposit box rentals.
Unlike financial institutions such as banks, private vaulting facilities offer better security for the assets you’ve worked so hard to acquire. Since these facilities are not regulated by the government, they are safeguarded from legislations like the Bank Bail-In Law. This means that the items you store in these private facilities, be it fiat currency, precious metals like gold and silver, family heirlooms, and the like, are in safe hands.
Your Best Bet?
Today, facilities like Private Vaults Australia (PVA) are proud to offer secure storage completely separate to the banking system. To learn more about how a private vault secures your assets from the Bank Bail-In Law, contact PVA or read the the PVA blog for more interesting news, tips and ideas to guide you.
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