Cyprus banks will stay closed until Thursday

[Bosonic]

Source: BBC

The Cypriot central bank has announced that the country's banks will stay closed until later this week as fears mount of a bank run.

The country's banks were closed for a scheduled Bank Holiday on Monday, something that allowed Cyprus to try to implement a levy on savers' deposits.

That move triggered unease among depositors in Cyprus, where cash machines soon ran out of funds.

It had earlier unnerved investors, sending shares and the euro lower.

Read more: http://www.bbc.co.uk/news/business-21823432

[Renew Deal]

1. This was a profoundly stupid idea

And once again, the banks keep the profits and spread the losses.

[BlueStreak]

2. Exactly. Probably the stupidest banking policy ever announced

If you want to guarantee a run on banks, this is a perfect way to do it.

And not just the Cyprus banks. This could very easily spiral out of control and kill all the banks in the weaker Euro economies.

And why? What could they possibly have been thinking? Fund the bailout of banksters by simply taking the money away from depositors? That is insane.

[Berlin Expat]

3. It is a stupid

policy, however the Central Bank of Cyprus is likely using this window to get some big-time capital controls into place. They'd be foolish if they didn't.

While capital controls might not prevent a bank run, they can mitigate the more damaging effects.

For instance, prohibition of funds transference out of the country or to another bank, limits on withdrawals, say 100€ per day, up to a maximum of 50% allowable before the accounts are frozen, only EFT deposits from employers and automated bill-paying allowed, etc.

I would think that some pretty major capital controls will be in place when the banks re-open. I admit, I could be way off. Maybe not.

And when customers complain, the banks will say, "Hey, take it up with the Central Bank." And then the Central Bank will say to the customers, "Because f**k you, that's why."

Once capital controls are in place, there isn't jack you can do about it. You're stuck. The only people who aren't screwed are the ones that either had no money in the bank - or a negligible amount - or the well-off who can afford to take the hit and also have multiple bank accounts they can exploit.

Everyone else - your average Joe, such as it were - well, they're shit outta luck.

[BlueStreak]

5. The banking system depends on trust

If people don't trust that their money is kept safe in banks, the whole banking industry collapses.

What you are describing MIGHT work for this one event and to the benefit of Cyprus banks. But if this is allowed to go through, people should not ever trust any bank anywhere in the world.

Let's be clear what this is about. The banks screwed around and lost a bunch of money (and a lot of banksters got rich in the process). And to bail out the banksters, the EC is saying that they will simply take 10% of the money that is on account -- simply impound it. It is gone -- effectively transferred to the banksters with the stroke of a pen.

So I really don't understand anything you are saying. There is nothing good about this move. No way to rationalize it.

[DeSwiss]

4. They should see some spouting by then.....

- K&R