alarming levy in Cyprys

[amalan11]

I was very surprised to read today that in the latest Euro zone deal Cyprus has suddenly decreed that all savings that people have in the bank will be subject to a one off levy to help fund a Euro rescue package ,of 9.9% on all money 100,000 euro (A$125,000) or 6.25%  on less .

That seems so unfair ,I really feel sorry for the people it will affect it would be awful..

I wonder if that kind of thing will open the floodgates for other countries to do the same,frightening thought:_|

[icyfroth]

Totally agree with you in post 7, Hawk.

They should get out of the euro system and countries should have sovereiginity over their own economies.

[lakeland27]

its sounds like another great idea from the large banks and sharetraders.. manipulating the market again in order to buy low and sell high ?

[icyfroth]

Pulling the last dregs out the pockets of populations already being taxed to make up for the disastrous investments made by speculators.

[tasfleur]

"They should get out of the euro system and countries should have sovereiginity over their own economies"

I couldn't agree more Icy, from the very beginning, I always believed the Euro system was going to fall over in the long term and be a disaster.

[cherry*135]

Another perspective:

Cyprus is unique. Besides being tiny, its banking system looks different from those in most other countries. Much of the big money deposited in its banks is from foreign investors, including Russians who have long been suspected of money laundering. Those investors had fair warning that Cypriot banks were troubled. The issue has been simmering for six months. But those investors left their money in the bank, in part because they were gambling that the banks would be bailed out at no cost to them. If the current plan is approved, depositors will have lost that bet.

Worse, the strategy employed in the bailout of Greece — in which bondholders of its sovereign debt were paid less than face value — will not work in Cyprus. Cyprus’s banks own much of the country’s debt, so any effort to reduce that debt by forcing debt holders to accept less would only make the banks more troubled.

Given the brutal history between Russia and so much of Europe — and speculation that so much of the money is ill gotten — it is clear why it would be so politically unpalatable to countries in the euro zone, Germany in particular, to bail out Russian depositors. And even if the move were to create a run on the banks in Cyprus, the contagion would be limited.

There is very little chance that politicians would ever choose to use the model they developed in Cyprus in a country like Italy or Spain, where a run on the banks would have such profound implications.

By the way, if you’re wondering why investors left so much money in troubled Cypriot banks, here’s a trivia question: Would you have been better off leaving your money in a bank in the United States or in Cyprus over the last five years?

The answer: You would have been better off in Cyprus, even after the bailout, when your money was “confiscated.” If you had 100,000 euros in a Cypriot bank account over the last five years, where the interest rate has averaged about 5 percent, you would have about 127,600 euros today. Even after the bailout, which would require you to give up 10 percent of your deposit — 12,760 euros — you would be left with 114,840 euros.

The American bank? The $100,000 you deposited at Bank of America five years ago is about $105,100, at the going rate of about 1 percent interest a year.

http://dealbook.nytimes.com/2013/03/18/a-bank-levy-in-cyprus-and-why/