Why the run on banks?

IN A country struggling with rampant corruption, a weak judiciary and unstable governments, the Bulgarian banking system has consistently won praise for its stable institutions, high liquidity and low risk. In the last few weeks that system has come under attack in the worst run on banks in 17 years.

The central bank said runs on First Investment Bank (FIB) and Corporate Commercial Bank (CCB), the country’s third and fourth largest lenders, in the last two weeks were part of a “deliberate and systematic attempt to destabilise Bulgaria's banking system”. According to the authorities, criminals tried to disrupt the system by sending emails and text messages urging people to withdraw their funds from several large banks.

The banking crisis was made worse by political instability. The Parties recently agreed to a snap election and the Socialist-led government of the prime minister, Plamen Oresharski, is expected to resign soon. Mr Oresharski’s cabinet was in power for barely a year, plagued by street protests demanding its resignation and by a controversy over the Continue reading