European Union Seeks to ‘Mobilize’ Private Retirement Accounts

By Barbara Hollingsworth | February 18, 2014 | 12:14 PM EST


Cypriot students protest outside presidential palace in Nicosia in Dec. 2013. (AP photo)

( -- European Union officials are eyeing private retirement accounts as a way to jump-start lending, boost the continent’s sputtering economy, and make more long-term capital available to small businesses and large infrastructure projects, Reuters reports.

According to an internal EU document Reuters reviewed, the 28-country EU will “ask the bloc’s insurance watchdog in the second half of this year for advice on a possible draft law ‘to mobilize more personal pension savings for long-term financing’.”

"The savings of the European Union's 500 million citizens could be used to fund long-term investments to boost the economy and help plug the gap left by banks since the financial crisis,” Reuters reported.

"The document said the ‘appropriateness’ of the EU capital and liquidity rules for long-term financing will be reviewed over the next two years, a process likely to be scrutinized in the United States and elsewhere to head off any risk of EU banks gaining an unfair advantage,” the news service added.

However, some observers see the internal report as a sign that the EU is gearing up for another Cyprus-style bailout plan that will use a percentage of assets seized from private bank accounts to help pay for more financial bailouts.

In December, hundreds of Cypriots marched from the tiny nation's finance ministry to the presidential palace to protest the bailout plan, which has led to rising unemployment.

“What is left unsaid is that the ‘usage’ will be on a purely involuntary basis, at the discretion of the ‘union’, and can thus best be described as confiscation,” writes Zero Hedge Fund’s Tyler Durden, who noted last month that “lending to companies and households [in the EU] shrank 2.1% in October - the biggest drop on record!”

Following the 2008 banking crisis, lenders in the EU were required to maintain larger reserves. But rules aimed at preventing another liquidity crisis are also preventing the banks from making needed loans.

Banks are hoarding capital instead of lending it out to spur business investment and job formation. As of January 31st, unemployment in the euro area was 12 percent, nearly double the jobless rate in the U.S., with a 23.2 percent unemployment rate for young people under age 25.

And with the euro zone’s main interest rate at a record low of 0.25 percent, the New York Times reports that there are “concerns that Europe might be headed toward a Japan-style deflationary quagmire” in which prices free-fall, destroying both company profits and jobs.

Meanwhile, 37-year-old Ryan Crane, executive director of JP Morgan’s Global Program Trading desk, became the fifth international banker to die under mysterious circumstances in a nine-day span between January 26th and February 3rd.