Spaniards start converting some savings from euros to British pounds.

Ángel de la Peña, a Spanish government worker, is seriously considering the once unthinkable: converting some of his savings from euros to British pounds. Related European Economic Outlook Dims Amid Leaders’ Impasse (May 25, 2012) Times Topic: European Debt Crisis Related in Opinion Editorial: The Crisis This Time (May 25, 2012) Sunday Review: Spain’s Yearnings Are Now Its Agony (May 20, 2012) Enlarge This Image The New York Times Alvaro Saavedra Lopez, a senior executive for I.B.M. in Spain, says many of his corporate counterparts across the country are similarly looking for safer havens by transferring their spare cash to stronger euro zone countries like Germany “on a daily basis.” It is only a trickle so far, and not nearly enough to constitute a classic bank run. But these growing transfers of deposits out of troubled Spanish banks reflect a broader fear that the country’s problems could make it hard for Spaniards to get to their money if banks fail and cannot be supported by the government. In a worst case, some even worry their money will be worth substantially less if Spain is forced to leave the euro currency zone and re-adopt its old currency, the peseta. Money already has been pouring out of banks in Greece, where many citizens believe it is increasingly likely that their country will be forced to leave the euro zone. But for European policy makers and economists, the possibility of mini-runs on banks spreading from Greece to other, bigger countries like Spain — with 1 trillion euros, or $1.25 trillion, in bank deposits — poses a much more serious risk. Indeed, the outflow of money from Spanish banks could increase if the ratings agency Standard & Poor’s, as expected, downgrades Spanish banks, in effect saying that their weakened state makes them riskier. The havoc that a stampede might cause to the Continent’s financial system would greatly complicate efforts by European Union officials to fashion a longer-term plan to ease the debt crisis and revive Europe’s economy, because authorities would have to cope with the staggering added costs of shoring up banks. “A bank run can happen very quickly,” said Matt King, an expert on international fund flows in London for Citigroup. “You are fine the night before, but on the morning after it’s too late.” It was a similar liquidity crisis on Wall Street in September 2008 — which started with nervous investors pulling money from troubled institutions, then quickly from healthier ones — that set off the financial crisis. In Greece, more than two years into its financial crisis, nearly one-third of the country’s bank deposits have already left the country. There has been no such exodus in Spain so far, where over the last year about 4.3 percent of bank deposits, or 41 billion euros, the equivalent of about $51 billion, has been transferred out of the country. But that amount is in addition to a decline of 140 billion euros in foreign-owned financial assets in the last year, like the sale by foreigners of Spanish government bonds. The trend worries European officials. At an informal meeting of European Union leaders on Wednesday in Brussels, Italy and some other countries began pushing a proposal to increase confidence in banks — and stem withdrawals — by creating a regionwide deposit insurance system to buffer account holders against banking collapses, similar to Federal Deposit Insurance Corporation in the United States. It is especially a concern for Spain, where the national deposit insurance fund is virtually bankrupt. What is more, the condition of Spanish banks is expected to worsen over the next year as commercial real estate and mortgage losses, a big source of the nation’s bank troubles, continue to mount. So far there is little sign that specific plans for a Europe-wide deposit fund are imminent. But officials in Brussels say the idea, along with the more controversial question of issuing euro bonds backed by the credit of all euro zone members, will be discussed in more detail next month when the European Union leaders hold their next formal meeting. The idea of euro zone-wide deposit insurance has been around for a long time, but it faces the obvious political hurdle of German taxpayer resistance to backing 2.8 trillion euros worth of deposits in risky countries like Spain and Italy, as well as those that have already been bailed out — Greece, Ireland and Portugal. In a recent report, Mr. King, the Citigroup analyst, highlighted how the flight of money held by foreigners presaged broader bank crises in Ireland and Greece before those countries required European bailouts. Italy, too, is now nervous about the sudden exodus of 220 billion euros in foreign money over the last year.