With speculation rife that Deutsche Bank may be on the brink of collapse under the weight of a massive finefrom the US Department of Justice, the safety and security of financial institutions is once again under the spotlight.
WEF used its executive opinion survey to ask "in general, how do you perceive the soundness of banks?"
So the measure isn't based on any objective economic or accounting measure, but rather by the perceptions of the population. The countries are ranked from 1 (banks need more money) to 7(banks are generally sound).
The survey showed that people in the UK and US really don’t trust their banking systems after the 2008 financial crisis. The UK was ranked 62nd and the US came in at 36th, below Guatemala, Colombia, and Honduras.
Check out the countries with the safest banks below.
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14. Czech Republic — The Czech banking sector is unusual in that foreign-owned lenders dominate the industry, but consumers don't seem to mind, ranking them the 14th safest in the world.
13. Guatemala — The densely populated Central American nation of 15.5 million people has three key players in its banking system — Banco Industrial, Banco G&T Continental, and Banco de Desarrollo Rural. All three are seen as being fairly sound, according to the WEF's survey.
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12. Luxembourg — It's no surprise Luxembourg scores highly, as the country is famous for its financial sector. Its Banque et Caisse d’Épargne de l’État is often cited as one of the safest on earth.
11. Panama — As the country has no central bank, Panamanian lenders are run conservatively, with capital ratios almost twice the required minimum on average. Traditionally seen as a tax haven, the country has made substantial strides to shake off that reputation since the financial crisis.
10. Sweden — Although Swedish lenders are being squeezed by the Riksbank's negative interest rate policy, Swedish banks are still among the safest in the world, according to the WEF.
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9. Chile — In July, ratings agency Fitch cut the outlook of the country's banking system to negative, based on "weakening asset quality and profitability," but that hasn't spooked Chileans, according to the WEF.
Reuters/Ivan Alvarado
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8. Singapore — Singapore is renowned as one of the world's great financial centres, and the soundness of its banking sector reflects that.
REUTERS/Edgar Su
7. Norway — As an oil-reliant economy, Norway has faced serious issues in recent years, and in August, its banking system had its outlook cut to negative by Moody's. However, the country's banks remain very sound, the WEF's survey suggests.
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6. Hong Kong — Another global financial centre, Hong Kong is home to arms of most of the world's biggest banks, and some of the world's safest financial institutions.
5. Australia — A small group of four major banks divide up most of Australia's banking sector, while foreign banks are tightly regulated, making sure the system is sturdy.
4. New Zealand — New Zealand's banking sector is dominated by a group of five financial players. Decent profits and growth without too much competition has seen the sector thrive, although it slips from second last year to fourth in 2016.
3. Canada — Canadian banks have long been a byword for stability. The country has had only two small regional bank failures in almost 100 years, and had zero failures during the Great Depression of the 1930s. Last year, the country's banks were seen as the safest on earth, so confidence has clearly slipped a little.
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2. South Africa — South Africa's so-called 'Big Four' — Standard Bank, FirstRand Bank, Nedbank, and Barclays Africa — dominate the country's consumer sector, and are widely seen to be pretty safe, with only one other nation scoring higher.
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1. Finland — Finland's banking sector is dominated by co-operative and savings banks, which take little risk. The country's central bank governor, Erkki Liikanen, below, has led the way on proposals to split investment banking and deposit-taking activities at European lenders. Ranked fourth in 2015's list, Finland's banks have got even safer this year.
Switzerland has a long history and strong reputation of providing safe offshore private banking. However, jurisdictions like the Cayman Islands, Singapore, Germany, Gibraltar, Germany and Belize are also very safe options for offshore banking.
The safest place in the world is Iceland, which ranks number one on the 2022 Global Peace Index. Iceland, with a score of 1.107, has held this position on the GPI for over a decade.
U.S. government securities—such as Treasury notes, bills, and bonds—have historically been considered extremely safe because the U.S. government has never defaulted on its debt. Treasury bonds also pay the highest interest rates. They are offered to investors for a term of 20 or 30 years to maturity.
Where to safely keep cash at home. Just like any other piece of paper, cash can get lost, wet or burned. Consider buying a fireproof and waterproof safe for your home. It's also useful for storing other valuables in your home such as jewelry and important personal documents.
Your money is safe in a bank, even during an economic decline like a recession. Up to $250,000 per depositor, per account ownership category, is protected by the FDIC or NCUA at a federally insured financial institution. What happens if my bank fails during a recession?
CDs, high-yield savings accounts, and money market funds are the best places to keep your cash when it comes to interest rates. Treasury bills currently offer attractive yields at the lowest risk. Learn how they compare in terms of yield, liquidity, and guarantees.
The Swiss franc is the official legal tender of Switzerland and its tiny neighbor Liechtenstein, and the currency is seen as a safe haven due to Switzerland's political stability.
The Swiss franc is backed by large amounts of gold and other assets, granting Switzerland a “safe haven” status. These reserves ensure stability even when the global economy isn't doing well. Additionally, Swiss banks are very discreet.
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