Remember the basic dynamic of the eurozone’s quiet bank runs. Today, a euro in a Spanish bank is worth the same amount as a euro in a German bank. But if you think the eurozone might break up, you’d rather have your euros in German banks. So people tend to shift their money out of Spanish banks. But the more that euros flee Spain, the more the Spanish economy hurts and the less Spain has to worry about the fact that leaving the euro would cause bank runs. So there’s the potential for a self-fulfilling cycle.
And it’s still happening according to the latest data out today “with private sector deposits falling slightly more than 1 percent” in August. The optimist’s spin is that’s a slower rate of decline than we saw in July. And that’s nice, but I don’t really see why the second derivative is relevant here.