German Insurer sues Bundesbank to Open Central Bank Checking AccountSubmitted by Fabio on Thu, 01/21/2010 - 05:46
This is not widely reported so far in US media, but it is a matter of interest for all those interested in the tangled web of monetary policies. To my knowlegde, the situation in the US is not that different. Only banks and government institutions can have checking accounts at the Federal Reserve and I don`t think the FDIC is responsible for businesses.
A discussion of this topic could highlight the strange fact to the public, that by depositing "cash" on a bank account, you transform your cash into a liability of the bank to you, which carries an insolvency risk only to be mitigated by direct access to the Central Bank (the purchasing power risk in case of widespread usage of Central Bank "bailouts" is another story).
"Talanx Sues Bundesbank to Open Central Bank Checking Account
Talanx AG, Germany’s third-biggest insurer, sued the Bundesbank to be allowed to open a checking account with Germany’s central bank.
The insurer filed a suit at the Frankfurt Administrative Court claiming the Bundesbank discriminates against businesses, because it offers checking account services only to other banks, Thomas von Mallinckrodt, a spokesman for Hanover, Germany-based Talanx said in an interview yesterday.
“As an insurer, it’s our very own task to manage risks and regulators demand that from us,” Mallinckrodt said. “The Bundesbank is the only lender in Germany with no risk to become insolvent, so only an account there is risk free.”
Regulators have been tightening rules for banks and insurers alike in an effort to tackle the credit crisis. Plans by the German government to shift regulatory oversight of the financial sector, including that of insurers, to the Bundesbank has been criticized by the insurance industry.
The central bank doesn’t offer accounts to businesses, Bundesbank spokeswoman Susanne Kreutzer said in an e-mailed statement. That’s why it rejected Talanx’s application for an account, she said."
Best whishes from Munich