June 30, 2014: 11:31 AM ET
Bulgarian authorities have made seven arrests and pumped more than $2 billion into the country’s financial system in a bid to prevent a bank run spiraling out of control.
Officials blamed the rush to withdraw deposits on a coordinated attempt by individuals to destabilize the banking system by spreading unfounded rumors via social media, emails and text messages.
“There is no cause or reason to give way to panic. There is no banking crisis, there is a crisis of trust and there is a criminal attack,” said Bulgaria’s President Rosen Plevneliev in a public address on Sunday after the arrests were made.
It all started roughly 10 days ago when messages began circulating warning people that the country’s financial system was unstable. Bulgaria’s Corporate Commercial Bank ran out of money and was placed under state control.
The collapse revived memories of a previous Bulgarian banking crash in the 1990s, and as the rumors kept coming another Bulgarian bank — First Investment Bank — was overwhelmed by people rushing to withdraw their savings.
That bank was forced to close temporarily on Friday after its branches and ATMs were drained.
In response, the central bank said over the weekend it would provide a credit line worth 3.3 billion Bulgarian lev ($2.3 billion) to the country’s banks to reassure people about the safety of their savings.