this post was submitted on 14 Aug 2024
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Same thing as if everyone stopped paying any type of loans. A shock to the banking system, potentially a collapse if the debt in question is a significant percentage of all debt. Many people would lose their savings.
And no don't hope that bank owners would absorb the debt, they would just liquidate the bank in a bankruptcy wiping out everyone's deposits.
Edit: In most countries there's also a deposit insurance scheme meant to cover cases of bank failure. But it can cover one or two banks failing, not all of them at once.
In Germany, everyone is protected up to 100,000 โฌ. So it would actually be a nice reset button where only the rich would "suffer"
That only applies to cash. The rich have the greater majority of their wealth in assets, so they likely won't even give a second thought to losing all of their cash. Who it's actually going to hurt are the middle class workers nearing retirement. The ones who make enough to have some semblance of a retirement fund and who have also moved this fund to cash to reduce volatility.