Could we, overnight, convert a % of deposits into equity for the banks? Or is this simply a bonkers notion? Say 2.5% of all deposits under €20,000 which was the previous limit up to September 2008 and say 5% from €20,000 to €100,000 per depositor per institution and 8% of deposits over that level. If the banks were to commit to buying back the shares plus interest so issued as profits allow over a 10/20 year time frame, might this not be a better first port of call rather than all tax payers having to fund the bank bailout via state borrowings? After all those with the largest deposits have benefited most from the state bank guarantee without it they could have lost a lot more than 8%.
Or might we suggest that the banks do this themselves in September of this year by repaying the money given by the state when the guarantee runs out and could reasonably be expected to be modified? Of course the problem with such a notion is that any announcement of it would have to apply instantly or people with the most would withdraw their deposits.