THE "EUROPEAN BANKING UNION AND THE NEW BANKING MODEL" CONFERENCE / GHEORGHE PIPEREA: "Bank deposits could migrate to the stock market"

Savings from bank deposits could be transferred to the stock market, says professor Gheorghe Piperea, who considers that the fear of the bail-in could help the growth of the stock market.

In his opinion, the bail-in violates human rights: "From a legal point of view, the bail-in means the following: you have some money deposited with a bank and because the institution in question is going through difficulties that are not your fault, the money, over which you have a right of ownership, gets converted into shares in the bank in question. But the shares do not represent an asset which you have a right of ownership on, but a lottery ticket, based on which you may or may not collect dividends".

The bail-in means the expropriation of assets which people have a right of ownership on, and for that expropriation the Romanian state could be forced by the ECHR to pay damages, Gheorghe Piperea said. "Romania should think twice before joining the European Banking Union".

He said: "We will be participating in the European Union for the purpose of implementing the bail-in. What is the alternative to avoid having the money taken from the deposits? Keep our savings in safes? It's risky. Take the capital out from banks and move it to Singapore? This is probably happening already. A large portion of savings may be invested in the stock market. I don't know if the guarantee fund in Romania could withstand the default of a major bank".

Gheorghe Piperea considers that the major problem comes from the fact that the European banking system is fundamentally flawed, as financial institutions act as commercial banks, as well as investment banks, insurance providers, debt collectors and real estate managers.

"In order to invest money on the stock market, won't we have to process the money through the banking institutions, which also have the role of custodian banks?" lawyer Gheorghe Piperea said, and he mentioned that if these banking activities don't get separated, "we will head 200 km/ straight into a wall and the collapse will be unavoidable".

Quoting a study made by Standard&Poor's, Gheorghe Piperea said that the ratings of European banks could be affected if the authorities proceed with the implementation of this bail-in.