Bankruptcy of the country and deposits with the broker

[Decub]

Well, I think forex and bankruptcy of a country might stand on different ground. If a country goes bankrupt, their currency will depreciates so you can go short on it of course. You might not want to deposit more than $100 during those kind of hard time. You just never know if they will close off their company and scam your money or steal from you or just have some laws that will come in and interrupt the business of forex and the brokers. Well, that is less likely to happen in this day and age. However, you do not want to deposit so high in any broker, and remember events like LR, where your money was lost. Also, bitcoin recently had large illegal scandals too so anything can happen so protect yourself first.

Yes in cases of bankruptcy in a country, they might come up with some kind of laws, limitations that will affect the broker and investors as well. The broker might stand clean and keep a clean sheet but because of the laws that will be put in place to safeguard the country's economy at that time, the traders would most likely have some negative part of it.

 

[Pettyeve]

If a country has gone bankrupt, it does not have anything to do with the broker because the broker's transaction will be electronic. When the broker has other offices in other countries, they can shift their main finance department to the other countries and operate from there.

 

[kasual]

Well, company has own operation money and they’ll not going to be bankrupt when countries goes on crisis. However, we need to be aware when brokers have lack of money and make the business run fully depend on investors money. They are bucketshop type of brokers which can steal traders client money.

 

[sindarin]

Just hipotetical question.... When country goes bankrupt has that any effect on money deposits within the broker located in that country? I mean, can money be frozen or something?

It could, just like what happened to so many cyprus based broker that store their money in cyprus, they loss all and also become a scam broker, so the most important thing is to know where your broker save your money.

 

[Decub]

@sindarin but you know, most/some brokers don't have their base in one country and each country have their own financial department which is of course responsible to the head quarters. In that case, I rarely think it will have any effect because the incidence of one of the countries would rarely affect the others.

 

[sindarin]

But if the headquarter in that country which got bankruptcy i think that broker will gone forever, as we can see in many brokers that really based in cyprus when there is a crisis in cyprus.

As for me i still think the best way to preven this thing from happening only by invest in a reputable broker and also in AAA country like UK or US.

 

[ahmad]

Obviously, bankruptcy can influence the money value and of course the economic of a country..

 

[kasual]

Brokers money will keep safe in trustworthy bank. They won’t save the money on country which technically, have financial problems. I think brokers have own analyst which tell them how to make the money keep secure. So, though particular countries goes bankrupt, I think it won’t affect to the brokers withdrawal payment.

 

[Bonyi]

I think it does. When a country goes bankrupt it will definitely affect the value of that particular countries currency.

 

[sindarin]

Brokers money will keep safe in trustworthy bank. They won’t save the money on country which technically, have financial problems. I think brokers have own analyst which tell them how to make the money keep secure. So, though particular countries goes bankrupt, I think it won’t affect to the brokers withdrawal payment.

If you put that thing for all broker then you are wrong, not all broker will do the same thing, have you ever heard some broker that become scam because of Cyprus crisis? That is one of the best example if one country bankrupt the bank there where those broker deposited their money will be loss.

 

[kasual]

@sindarin
People money on bank will keep secure though traders has deficit income which put them on crisis. The way to government secure the economic health is cut bank interest and make loan interest higher. Or in case of greece, government cut minimum standard salary. So, its not like that government will steal people money on bank. Technically, brokers fund remain secure if they are save it in bank.

 

[barood4money]

I don't know the correct answer. But i think that if the country gets bankrupt, then it may affect the brokers in some way. If country gets bankrupt then the value of the currency will go down. So on the the money deposited at brokers will also affect.

 

[Decub]

If we face it like that, then we would rightfully say that if a country goes bankrupt, then it will affect all firms, establishment and companies operating in the country be it foreign or local which I don't think is so. Most good brokers have offices and base of operation in more than one country and it might not really affect them much if one of their bases go bankrupt.

 

[TANMOY]

always bankrutpcy is the reason for any good or bad trading now a days lots of country pay TRADING THEIR OWN CURRENCY

 

[orni308]

i think yes , when a country goes bankrupt, it needs money to operate in such cases government will definately freeze bank accounts, or any such options which will generate money, it has happened in Argentina too..

 

[budado]

Its very rare for a country to get bankrupt and if ever it does they still need to pay it one way or another. So in short countries are still the best and most stable way to invest money. Since its always have economy to depend on.

 

[Decub]

There is something like IMF and even though a country goes bankrupt by virtue of natural disaster or bad government, they always have things like bail out plan and I don't see it as a way of affecting trading activities. They want to rise up again and also, there are many traders from different countries which make up the trading activity of the broker.

 

[budado]

That's true. And I don't think a government can default even if its goes bankrupt. What ever happens theirs always a way to pay back or compensate a bankrupt country. Like for example the Philippines. In 1986 its almost went bankrupt and theirs a lot of negotiation happens for our country to repay other countries.

 

[sindarin]

Bailout is the best way to prevent bankruptcy, but i think our money if stored in a bank especially in that country bank sure will be affected. But it is very rare to see a country that bankrupt nowadays.

 

[budado]

Bailout is the best way to prevent bankruptcy, but i think our money if stored in a bank especially in that country bank sure will be affected. But it is very rare to see a country that bankrupt nowadays.

I guess in term of value. The best example is the Philippines. In world war II. 1 US dollars is equal to 1 Philippine Peso. But now 1 US dollar is equal to 43 pesos. Ten years ago its even value at 55 peso to US dollars. Simply because our country almost got bankrupt because of corruption.