After the recent financial crisis, which was caused by banks handing out mortgages to anyone (due to misplaced employee incentives) even if they could not pay it back, can you trust the banks anymore?
How does the bank work? Banks act as financial intermediaries by providing liquidity (by processing payments like checks) and lending (mortgages). They do this by estimating the odds of customers coming and pulling out their money (say its 1/10). The banks can then lend the rest of the money (9/10) in the form of prime mortgages and, indirectly, sub-prime mortgages.
Still uneasy Ireland is still facing civil unrest as their financial crisis deepens. The govenment is forming strategies to bailout the
banks, but their “first priority is to restore confidence and halt an outflow of cash customers have withdrawn €13bn of deposits this year [alone]”. When consumers pull their money out of the bank, banks are not able to finance mortgages and thus go bankrupt. The solution is to inject more capital into the bank or provide deposit insurance.
In the end no ones money is safe, but if want your money to be secure, if you want to buy a house, or if you want to earn interest, you have to trust the banks in the end.