People are getting their funds out of shaky banks with creativity.
I’ve been called a fear-monger. But when I see news that Italy is launching a stimulus worth over 40% (!) of its GDP to attempt to revitalize the economy, I can’t help but shiver. It’s not even making headlines.
Italy’s debt to GDP was 133% in 2019. Now add over 40 percentage points, and reduce GDP by about 8% to take into account a conservative 2020 GDP decrease, and Italy will have a debt to GDP ratio of nearly 200% by the end of 2020 if they manage to spend it all.
If I had money in an Italian bank, I’d be very worried about capital controls and then a Euro exit. I hope I’m wrong for the sake of diligent savers, but the danger is real enough to have to be taken into account by people who hold money there.
I discussed the case of South Africa last week, and I’d also be worried about holding ZAR.
So what do you do if you want to take money out of your country if you do not already have an offshore account?
1. Open an offshore account. Some banks allow remote openings.
2. Open a brokerage account offshore and keep your money there. There are a number of such service providers, allowing you to choose in which bank your money ultimately ends up being deposited. Why would an Italian open some brokerage account in Europe to only find out that the money is actually sitting with Deutsche Bank? Aim higher. Leave the Eurozone, and even keep Euros if you want, rather than converting into Dollars. It’s possible. Ultimately it’s your decision.
This is great if there are no capital controls. But what if there are capital controls and you will exceed your foreign investment allowances? Think of South Africa, Nigeria, Ukraine, etc.
I know of a method to exchange your local currency and then have your funds being tucked away at DBS bank in Singapore, which has the reputation for being one of the world’s safest banks.
Typically, you need hundreds of thousands of dollars to open an account there as a non-resident, but there is a way, through an intermediary, to have your funds in one of Asia’s most prestigious banks. All you need is the equivalent of a few thousand Dollars or Euros to deposit. You can transfer up to the equivalent of $500,000 per day. It’s not an active bank account, but at least your money is with DBS, and you can send your funds back to your personal bank account when needed.
This works for everyone, not just for people in countries with capital controls. So if you’re European and would rather have your money in Singapore, this is an option.
Some of these methods require people to get some documents notarized, and others not. So in the midst of confinement you can get your money out to DBS in Singapore.
Of course you’d have to speak to your tax adviser as I am not giving any financial, tax, legal, or investment advice. Typically you’d have to declare this to your authorities. I’m just sharing what other people are doing to avoid capital controls and keep their funds in what are deemed to be safer banks. It’s not a recommendation or advice in any shape or form. I’m just sharing knowledge.
- If you live in a country such as Italy or Spain and want your money out of there as you are worried, and want to discuss some options which include true geographical and currency diversification before capital controls possibly come kicking in – see the book below.
- If you live in a country with capital controls and want to find out how other individuals have been going around them – see the book below.
To a World of Opportunities,
The Wandering Investor