3.17.2013

What happens when your country goes bankrupt



Depositors Pay Price in Cyprus Bailout Deal

Excerpt:



Depositors in Cypriot banks will be hit with a one-off tax on their savings, as part of a €10 billion ($12.96 billion) bailout for the Mediterranean island from the euro zone and the International Monetary Fund. The deal, announced early Saturday, marks the first time in the euro zone's five-year-old financial crisis that depositors in bloc's banks will lose money. Accounts with more than €100,000 will be taxed at 9.9%, those with less at 6.75%, raising an expected €5.8 billion for the near-bankrupt nation.
So what's a depositor going to do?: Depositors in Cyprus Rush to ATMs

Nervous depositors in Cyprus rushed to ATMs Saturday to drain their accounts following a bailout agreement with international creditors that includes a levy on all the country's bank accounts. Lines formed at many ATMs as people scrambled to pull their money out after word that the €10 billion ($12.96 billion) rescue package Cyprus agreed with its euro-area partners and the International Monetary Fund included a one-off levy on deposits.



5 comments:

  1. They take a tithe on bank accounts, and then are surprised at a run on the banks. I wonder how many loans had to be called in as a result. Or don't they do that anymore?

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  2. Cyprus Deal Rattles Markets

    Markets in Europe and Asia slumped Monday after the weekend's news that Cyprus would tax all of its bank depositors to help fund its bailout.

    The move is a first in the euro-zone crisis, and analysts fretted that the tax's wide scope and its sudden nature—banks are shut and Cyprus plans to deduct the levy before they reopen—could shake the currency bloc's wobbly confidence.

    ReplyDelete

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