Response to Demeter (Reply #2)
Tue Mar 19, 2013, 06:01 AM
Ghost Dog (15,090 posts)
6. Insight - How Europe stumbled into scheme to punish Cyprus savers
Hours before newly-elected president of Cyprus, Nicos Anastasiades, was due to attend his first European summit, he met Germany's Chancellor Angela Merkel and other new colleagues at a cocktail reception. At the meeting for centre-right politicians in a swanky hall opposite the Belgian king's palace, Merkel congratulated him on his election victory. According to one person who attended, Anastasiades asked his new friends to make sure any bailout for Cyprus was fair.
Less than 48-hours later, when the deal was finally announced by exhausted officials in the pre-dawn hours of Saturday morning, it seemed anything but...
... According to insiders who attended the negotiations, the big hit to ordinary Cypriot savers was an outcome that nobody seemed to be seeking but no one could find a way to prevent. Merkel's government and EU officials were determined to make depositors pay. Anastasiades was determined to cap the levy on the wealthiest depositors at no more than 10 percent. That meant that small savers in Cyprus were forced to pay a levy as high as 6.75 percent of their deposits, a move that effectively rips up the protection savers thought they enjoyed on insured deposits of up to 100,000 euros.
The opposition in Cyprus called the deal "bank robbery".
Anastasiades's government was scrambling on Monday to come up with a new formula that would put more of the burden on rich, uninsured depositors and prevent a full-scale run on the banks when they reopen after a holiday weekend.
Meanwhile, European and Cypriot officials are trading blame for a decision which threatens to undermine confidence in the financial system across the continent...
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Insight - How Europe stumbled into scheme to punish Cyprus savers
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