Sunday, March 17, 2013

Euro Minister Doesn't Rule Out Taxes on Bank Deposits Beyond Cyprus

Unless eurozone officials are attempting to start a bank run across the EZ, the move to attempt an immediate tax of up to 10% on deposits being held at Cyprus banks is difficult to understand. This is either very Machiavellian move or EZ officials are extremely thick-headed as to what they think they can pull off.

NYT reports in with the latest (my highlight)
 In a move that could set off new fears of contagion across the euro zone, anxious depositors drained cash from automated teller machines in Cyprus over the weekend, hours after European officials in Brussels required that part of a new €10 billion bailout be paid for directly from the bank accounts of ordinary savers.

The decision — a first in the three-year-old European financial crisis — raised questions about whether bank runs could be set off elsewhere in the euro zone. Jeroen Dijsselbloem, the president of the group of euro area ministers, declined Saturday to rule out taxes on depositors in countries beyond Cyprus, although he said such a measure was not currently being considered.[...]
 A scheduled parliamentary vote on the plan at an emergency meeting Sunday was postponed until Monday.[...] Although banks placed withdrawal limits of €400, or about $520, on A.T.M.’s, most had run out of cash by early evening. People around the country reacted with disbelief and anger.[...]Under an emergency deal reached early Saturday in Brussels, a one-time tax of 9.9 percent is to be levied on Cypriot bank deposits of more than €100,000 effective Tuesday, hitting wealthy depositors — mostly Russians who have put vast sums into Cyprus’s banks in recent years. But even deposits of less than that amount are to be taxed at 6.75 percent, meaning that Cypriot creditors will be confiscating money directly from retirees, workers and regular depositors to pay off the bailout tab.[...] the surprise policy by the International Monetary Fund, the European Central Bank and the European Commission is the first to take money directly from ordinary savers. In the bailout of Greece, holders of Greek bonds were forced to take losses, but depositors’ funds were not touched.[...] 
Given the stunned reaction, it was not certain the measure would pass the Cyprus Parliament. Nicholas Papadopoulos, the head of Parliament’s financial affairs committee, said the decision was “much worse than what we expected and contrary to what the government was assuring us, right up until last night,” Reuters reported.

More here:  EXTREMELY DISTURBING: IMF Goes Directly After Bank Depositor Money


The Central Bank of Cyprus, in a letter to Cypriot banks has ordered all banks to temporarily freeze money orders and funds transfers, reports Ευρωπαϊκή Κρίση Χρέους.

The letter dated March 16, 2013 is marked "confidential" and temporarily prohibits institutions subject to supervision by the Central Bank from issuing money orders or  any other transfer of funds using any payment system or clearing and settlement systems, within or outside the Republic, including transfers within the same institution.

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