From: stewarts@ix.netcom.com (Bill Stewart)
Date: Mon, 31 Jul 95 23:23:45 PDT
To: Mike Bailey <bailey@computek.net>
Subject: Currency risk on bank accounts (Was: Zimmermann legal fund)
Message-ID: <199508010621.XAA28791@ix6.ix.netcom.com>
MIME-Version: 1.0
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>> > > The US banking industry has gone to the dogs. The day a non-US bank
offers
>> > > an account that can be accessed over the net will be the day I close
my US
>> > > accounts.
Some of the Channel Island banks offer accounts with ATM cards;
I think some of them are in Jersey (you don't have to remind people
you didn't say _New_ Jersey :-)

>I open an account with U.S. $$ in a foreign bank who uses francs  ... a month 
>later the franc loses 20 % of it's value as compared to the U.S. dollar. 

Happens to me all the time - I deposit my money in a dollar-based account,
the dollar takes a dive relative to the Yen, so my account's worth 20% less
in new Japanese cars...   Most of the banks in major European banking
centers and other banking-haven countries will let you have accounts in your
choice of 
major currencies, and a number of the smaller countries have local currencies
that keep parity with the US dollar or British pound.  That means your account
really has X US dollars in it, not X-US-dollars-converted-to-francs-on-deposit,
or maybe X Bahamian dollars which are officially worth X US dollars but
may be harder to withdraw quickly.

There is still some risk that (for example) the Bahamas government may
decide to default on its foreign debt by suddenly declaring the Bahamas
dollar to no longer match US dollars, but you can only get away with that
sort of thing once, so it's a 
desperation move, the kind of thing you do just before or after the revolution.
You're more at risk from small private banks that are offering high rates of
interest on foreign deposits because they're ripping off their depositors,
e.g. BCCI or Nugan Hand, but that's more risk in the Caribbean than Europe
(where the big risk is that they're paying you less interest than you might
get in the US, or where the local tax on bank-interest may be higher than
your US tax rate.)
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