Egypt’s Central Bank Imposes $640 Daily Withdrawal Limit to Avoid a Bank Run Amidst COVID-19
- Egypt’s Monetary Authority has announced a limit on withdrawals in a bid to avoid a bank run amidst the Coronavirus (COVID-19) pandemic.
- The country’s central bank governor, Tarek Amer, noted that over 30 billion pounds had been withdrawn in the past three weeks hence prompting them to take action.
This directive will affect both individuals and corporations to some extent. While the former has been limited to 10,000 Egyptian pounds (~ $640), companies’ daily withdrawals were capped at 50,000 pounds (~ $3,240). However, the limits imposed on companies are subject to change if an entity is withdrawing funds to pay its employees. ATM withdrawals on the other and have also been cut to a maximum of 5,000 Egyptian pounds ($320) in a day.
Apart from the monetary checks, Egypt’s central bank is incentivizing electronic payments by canceling transfer fees within these ecosystems. Based on this unfolding, decentralized cryptocurrencies like Bitcoin are likely to propose a greater value to those looking to derive more utility from their held-up funds.
Global Banking Systems Panic over COVID-19
Egypt is not the only country that has raised concerns of a possible bank run should clients withdraw more than bank minimum deposits. Ideally, banking institutions are required to hold up to a certain amount in deposits, mostly 10%. These stats clearly show that a repeat of the historic black markets would be inevitable should consumers behave irrationally.
The U.S Federal Deposit Insurance Corporation (FDIC) through its chairman recently advised citizens to avoid withdrawing all their funds. According to them, this will be a volatility cushion to the stock market during these uncertain times. While it's still too early to tell the full economic damage, banking ecosystems globally are in uncharted waters as they try to foster a strategic way to survive the novel Coronavirus effects.