March 19, 2013
Panic-stricken bank depositors in Cyprus emptied ATM machines across the nation after the surprise announcement Saturday that, as part of an extremely controversial European Union and International Monetary Fund bailout deal, authorities would seize up to 15 percent of all savings deposited in Cypriot banks. Markets across Europe plunged as fears of contagion or even a large-scale bank run in the region plagued investors, with the single euro currency falling to multi-month lows and gold rising back above $1,600 following news of the $13 billion scheme.
Critics ranging from banks and market analysts to politicians and even establishment media outlets lambasted the EU and IMF plan, saying it creates uncertainty and amounts to brazen wealth confiscation. Citizens and foreigners with money deposited in Cyprus, meanwhile, expressed outrage over the controversial scheme as well, demanding that it be halted immediately. Aside from Cypriots, Russians and Britons are expected to be among the hardest hit.
Despite imposing a $500 limit on withdrawals and a ban on online transfers, most ATM machines in Cyprus were completely drained of funds over the weekend as nervous depositors lined up to save what they could before the confiscation begins. March 18 is a national holiday, meaning financial institutions are closed. However, banks in Cyprus may also face an extended so-called “banking holiday” as national politicians iron out the details of the supposed one-time “stability” tax with EU and IMF policymakers.
The original EU-IMF plan would see accounts with less than $130,000 taxed at almost seven percent, while those above that threshold would have 10 percent confiscated by authorities. Anyone with more than 500,000 euros could lose 15 percent. However, some reports indicate that the initial EU-IMF plan called for seizing up to 40 percent of all savings.
The Parliament of Cyprus delayed a Saturday vote on the plan until March 18, reportedly because supporters of the scheme had not yet lined up enough votes to ram the wealth confiscation through. The vote is currently set for Tuesday. Recent news reports, however, say that vote could now be delayed until as late as Friday, and that changes in the exact confiscation figures could be forthcoming.
Some political leaders are scrambling to restructure the controversial plan, hoping to protect at least very small depositors from the savings grab, perhaps making up for it with a higher "tax" on wealthier individuals and larger accounts. Russian authorities — whose citizens have a significant amount of money deposited in Cypriot banks — are reportedly working to come up with an alternative bailout scheme.
Across the EU, however, the brazen confiscation of hard-earned savings was met with a mixture of seething anger and outright terror — fury over the confiscation of wealth that has already been taxed, and fear that similar plots could be hatched in countries such as Greece, Italy, Spain, Portugal, or even in Northern Europe. Top officials have declined to say whether the “tax” on deposits could be forced on other nations, too.
Critics ranging from banks and market analysts to politicians and even establishment media outlets lambasted the EU and IMF plan, saying it creates uncertainty and amounts to brazen wealth confiscation. Citizens and foreigners with money deposited in Cyprus, meanwhile, expressed outrage over the controversial scheme as well, demanding that it be halted immediately. Aside from Cypriots, Russians and Britons are expected to be among the hardest hit.
Despite imposing a $500 limit on withdrawals and a ban on online transfers, most ATM machines in Cyprus were completely drained of funds over the weekend as nervous depositors lined up to save what they could before the confiscation begins. March 18 is a national holiday, meaning financial institutions are closed. However, banks in Cyprus may also face an extended so-called “banking holiday” as national politicians iron out the details of the supposed one-time “stability” tax with EU and IMF policymakers.
The original EU-IMF plan would see accounts with less than $130,000 taxed at almost seven percent, while those above that threshold would have 10 percent confiscated by authorities. Anyone with more than 500,000 euros could lose 15 percent. However, some reports indicate that the initial EU-IMF plan called for seizing up to 40 percent of all savings.
The Parliament of Cyprus delayed a Saturday vote on the plan until March 18, reportedly because supporters of the scheme had not yet lined up enough votes to ram the wealth confiscation through. The vote is currently set for Tuesday. Recent news reports, however, say that vote could now be delayed until as late as Friday, and that changes in the exact confiscation figures could be forthcoming.
Some political leaders are scrambling to restructure the controversial plan, hoping to protect at least very small depositors from the savings grab, perhaps making up for it with a higher "tax" on wealthier individuals and larger accounts. Russian authorities — whose citizens have a significant amount of money deposited in Cypriot banks — are reportedly working to come up with an alternative bailout scheme.
Across the EU, however, the brazen confiscation of hard-earned savings was met with a mixture of seething anger and outright terror — fury over the confiscation of wealth that has already been taxed, and fear that similar plots could be hatched in countries such as Greece, Italy, Spain, Portugal, or even in Northern Europe. Top officials have declined to say whether the “tax” on deposits could be forced on other nations, too.
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