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After nervous customers panicked and drained their accounts, ultimately causing the collapse of Spanish bank, Banco Popular, equally jittery European Union officials are debating the merits of freezing access — preventing anyone from withdrawing any money — at the first sign of a bank run.

Proponents claim measures to halt a rush of withdrawals would prevent the downfall of floundering financial institutions at their most vulnerable point — in hopes of staving off a catastrophe at least as harrowing as that of 2008 — while detractors admonish the move might have precisely the opposite effect, with investors rushing to yank funds at the slightest indication of trouble.

“The desire is to prevent a bank run, so that when a bank is in a critical situation it is not pushed over the edge,” ‘a person familiar with German government's thinking’ toldReuters.

“Giving supervisors the power to temporarily block bank accounts at ailing lenders is ‘a feasible option,’ a paper prepared by the Estonian presidency of the EU said, acknowledging that member states were divided on the issue,”Reutersreports.

“EU countries which already allow a moratorium on bank payouts in insolvency procedures at national level, like Germany, support the measure, officials said.”

A cursory autopsy of last month’s Banco Popular failure had economic officials scrambling to figure out how best to prevent a similar financial debacle; but the idea of cutting customers’ access to their own funds when conditions warrant, blasts apart a Pandora’s Box of potentialities — all, favoring the State and banking industry over individual customers.

While officials contend cutting off account access would theoretically prevent a bank already in distress from going under, when scores of people withdraw money at once, the proposal toes a fraught but sacrosanct line blocking government overreach from private, individual finance.

According to the Estonian paper perused by Reuters, an additional measure proposed the development of a mechanism whereby customers in such a situation could withdraw “at least a limited amount of funds.”

“We strongly believe that this would incentivize depositors to run from a bank at an early stage,” Charlie Bannister of the banking lobby group, Association for Financial Markets in Europe (AFME), told Reuters, alluding to the possible whiplash effect described above.

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Envoys of the European Union originally discussed these withdrawal restrictions on July 13, with further talks set for September, but lawmakers would have to concur before any variant of the plan could be put in place. Continues Reuters:

“The plan, if agreed, would contrast with legislative proposals made by the European Commission in November that aimed to strengthen supervisors' powers to suspend withdrawals, but excluded from the moratorium insured depositors, which under EU rules are those below 100,000 euros ($117,000).

“Under the plan discussed by EU states, pay-outs could be suspended for five working days and the block could be extended to a maximum of 20 days in exceptional circumstances, the Estonian document said.

“Existing EU rules allow a two-day suspension of some payouts by failing banks, but the moratorium does not include deposits.”

In fact, only just now have insured deposits debuted as a target for the withdrawal moratorium, as authorities previously felt such a move “may have a negative impact on market confidence.”

Nevertheless, economic and banking troubles have hit several European nations in recent years, such as the Cyprus fiasco, as described byBitcoinist,

“Back in 2013, Cyprus’ banking crisis was a hair’s breadth away from a total economic collapse. Cypriot banks were desperate for a bailout from the EU and IMF and many account holders feared that their deposits would vanish. This fear caused a classic bank run and people were rushing to banks and ATMs in order to withdraw as much money as they could.

“Inevitably, cash became scarce and the ATMs stopped working. Many saw Bitcoin as the last option to secure their funds.”

With severely curtailed faith in Western and central banking institutions, that European Union insiders would look first to penalize customers for a bank’s poor planning and management in the midst of a theoretical future crisis typifies the impetus for throngs of people riding the tumultuous cryptocurrency wave as far away from Big Banks as possible.

Considering officials now hope to revoke access to bank accounts at perhaps the time customers would most need it, the marriage of State and finance obviates how insignificant the needs of the so-called little guy when the government sees only green.