What happens when a (Internation) Central securities depository goes bankrupt?
There is no generic answer and it would depend on case to case basis.  CSD are built on strong foundation in the sense they would have very low cost base and generally would not go bankrupt.  However if such a situation as CSD provide an essential role, the regulator, central bank and Government would all step in to prevent a total collapse. They would be forced merged with other entity or more capital raised or put under watch by Govt appointed trustee to settle issues so that there is least or No impact.
US or EU states are sovereigns which cannot go bankrupt. US states have defaulted in the 1840's, but in most of those cases creditors were eventually repaid in full. (I'm not 100% sure, but I believe that Indiana was an exception with regard to costs incurred building a canal system) The best modern example of a true near-default was New York City in the late 1970's. Although New York City isn't a state, the size and scope of its finances is greater than many US states. What happened then in a nutshell: Basically, a default of a major state or a city like NYC where creditors took major losses would rock the financial markets and make it difficult for all states to obtain both short and long term financing at reasonable rates. That's why these entities get bailed out -- if Greece or California really collapse, it will likely create a domino effect that will have wide reaching effects. "Sovereigns cannot go bankrupt. Basically, when a sovereign government (this includes nations and US States, probably political subdivisions in other countries as well) becomes insolvent, they default.  Sovereigns with the ability to issue new currency have the option to do so because it is politically expedient. Sovereigns in default will negotiate with creditor committees to reduce payments. Creditors with debt backed by the ""full faith and credit"" of the sovereign are generally first in line. Creditors with debt secured by revenue may be entitled to the underlying assets that provide the revenue. The value of your money in the bank in a deposit account may be at risk due to currency devaluation or bank failure. A default by a major country would likely lock up the credit markets, and you may see yourself in a situation where money market accounts actually fall in value." You must mean the current debt ceiling debacle. The meaning of it is: US government is constantly borrowing money (by issuing treasury bonds) and constantly repaying some of the bonds that come to maturity, and also has other obligations it has to meet by law all the time - such as Social Security checks, bonds interest, federal employees' salaries and pensions, etc. By law, total amount of money that can be borrowed at the same time is capped. That means, there can be situation where the government needs to borrow money to pay, say, interest on existing bonds, but can not, since the limit is reached. Such situation is called a default, since the government promised to pay the interest, but is unable to do so. That does not mean the government has no money at all and will completely collapse or couldn't raise money on the market if it were permitted by law to do so (currently, the market is completely willing to buy the debt issued by US government, and with interest that is not very high, though of course that may change). It also does not mean the economy ceases to function, dollars cease to have value or banks instantly go bankrupt. But if the government breaks its promises to investors, it has various consequences such as raising the costs of borrowing in the future. Breaking promises to other people - like Social Security recipients - would also look bad and probably hurt many of them. Going back to your bank account, most probably nothing would happen to the money you store there. Even if the bank had invested 100% of the money in US treasury bonds (which doesn't really happen) they still can be sold on the open market, even if with some discount in the event of credit rating downgrade, so most probably your account would not be affected. As stated in another answer, even if the fallout of all these calamities causes a bank to fail, there's FDIC and if your money is under insured maximums you'll be getting your money back. But if your bank is one of the big ones, nothing of the sort would happen anyway - as we have seen in the past years, government would do practically anything to not allow any big bank failures. Specifically I'm trying to understand this pargraph:  &gt;Stripping the German mobile-phone unit of its cash and increasing its net debt before the IPO could help lower the unit’s average cost of capital, said Carlos Winzer, a senior vice president at Moody’s Investors Service.  &gt;“Telefonica Deutschland had a very strong cash position and no debt, so this move will allow the German unit to have a more efficient balance sheet structure,” said Winzer, who has covered Telefonica for 20 years  How does moving cash from the German unit to the Spanish Telefonica unit induce a more efficient balance sheet structure for the German unit?  Appreciate any help! Andrew Lilico has a likely scenario for when Greece defaults on its sovereign debt: What happens when Greece defaults.   Here are a few things: Every bank in Greece will instantly go insolvent. The Greek government will nationalise every bank in Greece. The Greek government will forbid withdrawals from Greek banks. To prevent Greek depositors from rioting on the streets,   Argentina-2002-style (when the   Argentinian president had to flee by   helicopter from the roof of the   presidential palace to evade a mob of   such depositors), the Greek government   will declare a curfew, perhaps even   general martial law. Greece will redenominate all its debts into “New Drachmas” or whatever   it calls the new currency (this is a   classic ploy of countries defaulting) The New Drachma will devalue by some 30-70 per cent (probably around 50 per   cent, though perhaps more),   effectively defaulting 0n 50 per cent   or more of all Greek euro-denominated   debts. As Megan McArdle says, there's more at the link, all depressing. I think you're focusing too much on Greece leaving the euro and not enough on why Greece would leave the euro. Greece would leave the euro precisely so that it could pay back its debt in a new currency worth less than valuable euros. The new currency will devalue, since that's the point of leaving. Along the way the government forces its citizens to take the new currency. The money they have in Greek banks will be converted to the new currency: The citizens don't have a choice to keep their euros. One place you might consider looking for answers is in case studies from Harvard Business School.  When I was working an MBA, we studied the default of Argentina as part of our economics coursework. Other sources for your consideration might include: Most national banks are required by the regulations of their host countries to hold significant reserves in the form of government debt. A default would likely wipe out their capital and your common stock would become worthless. The common stock only has positive value today because of the option value based on the possibility the host country will evade a default. The Securities Investor Protection Corporation is roughly analogous to the FDIC for investments.  There are some important differences like a lack of 100% guarantee you get all of your funds back. The SIPC understands you invested knowing there was some risk, and therefore you take that same risk in getting your money from a failed brokerage.  However there is still a level of commitment and trust that lessen the risk of investing in the wrong place. Also, do not typo the acronym at your work computer.  In the US (and perhaps elsewhere) it is a racist term, and you are likely to get some bad search results. http://www.sipc.org/how/brochure.cfm I was just wondering, are banks in India federally insured? Yes the Banks in India are insured for Principal and Interest upto Rs 1,00,000/- per holding type per Bank. See the DICGC website. So if you have one or more accounts [in the same or different branches of a bank] and the Principal is say Rs 98,000/- and the interest accrued at the time of liquidation is say Rs 4,000/- you will get Rs 1,00,000/-  If you have more than Rs 1,00,000/- you will not get only 1 lac. If you have an individual account, and your wife has an account and both of you have a joint account. The total limit will be Rs 3,00,000/-. If you are guardian to your Children, its again considered separate. RBI Site as a good example on this. If you open Accounts in Different Banks, the limit increases.  What happen if banks like Yes Bank or IndusInd bank goes bankrupt? Both Yes Bank and IndusInd are participants in the DICGC and are insured. See the full list here. How will we recover money in those cases? Although insured, the process to get the money back would be time consuming. More often the bank is placed under moratorium, an effort is made for amalgamation or reconstruction ... Only if everything fails, the bank goes into liquidation. So it could be anywhere from few months to few years for you to see you money. Here is my perception of the situation, obtained from reading Degiro's Client Agreement. If Degiro shuts down, it will notify you about the fact at least one month in advance, and you will have enough time to order a transfer of your positions to a different broker. If Degiro shuts down unexpectedly, your assets will remain to be held at SPV, a separate legal entity which Degiro uses to hold the financial instruments belonging to the clients. Since SPV does nothing else but holding the assets, it is very unlikely that something bad will happen with it on its own. With some help from Degiro and/or the regulator (AFM) you should be able to transfer your assets from SPV to a different custodian and broker and thus regain control over them. If you have a non-Custody account, you have slightly higher chances of losing your assets, because Degiro can borrow your securities held at SPV. If both the client for whom Degiro borrowed a security and Degiro itself go bankrupt at the same time, the lent security will not be returned to SPV, there will arise a shortage, which will be proportionally distributed among the accounts of the clients holding this particular security. However, then the investor compensation scheme should kick in and help you recover up to 20000 EUR of your losses. "to answer the question in the title of your post...  + convince your fellow Euro nations to accept austerity,  + convince them to elect responsible governments,  + demand transparency from your leaders, and...  + make sure this never ever happens again.   Alternatively, build a time machine and go back in time to either...  + immigrate to another part of the world,  + sabotage the corruption of the PIGS nations,  + prevent the formation of a shared currency, or finally,  + do something to ensure Germany didn't lose WWII, as letting them be in charge of everybody's money would appear to be a sound financial decision.   That is how you negate the impact of the Euro collapsing.  Now, on to the details of your question...  I believe your initial assessment is correct. If one accountable nation were responsible for the solvency of its currency, it could be trusted indefinitely. As is the case with the Euro, as no one country is directly responsible for it, the less responsible governments are in a race to exploit it as much as possible.  Remember, ""Spain no es Zimbabwe!""  I think Euro zone nations will be lucky if all that comes of this is the fall of the Euro. Wars between nations have been fought over less significant developments than what Greece, Italy and Spain have done to the financial stability of their Euro zone counterparts.  Foreign gold trusts, possession of physical precious metals and precious metal ETFs (GLD is one stock ticker of such a fund, although I would look to a similar fund issued by a company with better physical gold audits) can hedge your currency risk. Check with local laws regarding physical possession of gold. In the USA when we left the gold standard for our currency, the government confiscated all privately owned precious metals and raided customer bank security boxes. Assess your own risk of that sort of thing happening." "Your question points out how most fractional reserve banks are only a couple of defaults away from insolvency. The problem arises because of the terms around the depositors' money.  When a customer deposits money into a bank they are loaning their money to the bank (and the bank takes ownership of the money).  Deposit and savings account are considered ""on-demand"" accounts where the customer is told they can retrieve their money at any time.  This is a strange type of loan, is it not?  No other loan works this way.  There are always terms around loans - how often the borrower will make payments, when will the borrower pay back the loan, what is the total time frame of the loan, etc..  The bank runs into problems because the time frame on the money they borrowed (i.e. deposits) does not match the time frame on the money they are lending." What drives the stock of bankrupt companies? The company's potential residual assets. When a company goes bankrupt it is required to sell its assets to pay off its debts. The funds raised from selling assets go to the following entities:  The usual order of debt repayment, in terms of the lender, will be the government, financial institutions, other creditors (i.e. suppliers and utility companies), bondholders, preferred shareholders and, finally, common shareholders. Depending on the amount of debt and the value of a company's assets, the common shareholders may receive some left over from liquidated assets. This would drive the stock price of a bankrupt company. I'm not sure I'd say the assets they had were worthless. One of the big controversies was whether it was a solvency crisis (bad assets) or a liquidity crisis (fine assets, but if everyone sells illiquid assets there's a fire sale problem).   The US and Buffett bet it was a liquidity crisis, and they were proven right. I notice you turn to ad hominem instead of providing evidence.  &gt;Go for it, name an empire that purchased its own debt historically and survived.  All current countries with a central bank purchase their own debt and all are surviving. The US is an empire. So there is one example. The Soviet Union was an empire until it failed, and it had a state controlled central bank.  There, I named two.  Now, please name a **single empire** that did not purchase its own debt, since you brought this up. I'll take it you cannot provide this since you are talking out of your ass and know nothing about it. It's sad that you make such absolute claims out of your ass and cannot provide evidence.