You should be very careful trusting banks. When banks become insolvent, which happened in 2008 and is likely to happen again, your capital is at risk.
However, some jurisdictions have better laws than others to protect depositors from losing their capital.
In this video, filmed at the Platinum Mastermind in Costa Rica, Max Wright explains why keeping your money in the bank can be a very fragile situation, and where you are best off opening a bank account for the lowest risk.
BE CAREFUL WITH BANKS
The world’s banking situation is fragile.
Take Cyprus in 2013 as an example. One night, people went to bed, thinking their money was safe. The next morning, a sizeable chunk of their account balances had been seized.
Max Wright knew a man who had made a fortune selling socks at a market in Australia. He decided to retire in Cyprus, and brought a million dollars into the country. He had only been there for a month, and his money was taken.
BAIL-INS AND BAIL-OUTS
In 2008, banks were insolvent. There are only two ways to fix this: a bail-out or a bail-in.
In a bail-out, the entire taxpayer base pays a levy towards the banks. In a bail-in, only the depositors get their account balances seized.
The bail-in is what Cyprus did in 2013. In the aftermath, the IMF and ECB both applauded the move as the recommended model for future crises. They also commented that the key to it being a success is that no one sees it coming, so that depositors don’t withdraw their money before it’s too late.
WHY SINGAPORE AND BELIZE ARE SAFER
If you do need to keep a sizeable portion of your wealth in cash, the best places to do it are Singapore and Belize.
All over Europe and the Western world, banks typically have between a 2 and 3 percent capitalization margin. In Singapore and Belize, it’s closer to 25–30% because of laws in those jurisdictions.
These laws protect you as a depositor, and both countries are very friendly to U.S. dollar accounts. You do have to be physically present in the country to open an account, but that may be a small price to pay compared to the alternative.