European officials to freeze/confiscate bank deposits as part of Cyprus bailout

May 24, 2004
3,231
503
608
Queens, NY
#1
This has never happened AFAIK and it might be a preview of what is to come should our debt escalate to an intractable level... Some people on Twitter are saying bank accounts are totally frozen.
Euro Area Takes Aim at Depositors in Cyprus Bailout
By Rebecca Christie & Corina Ruhe
2013-03-16T05:22:15Z
MJQMX36JIJUZ
(To see the ministers’ statement, click here. See TOP CRIS for more on the euro-area debt crisis.)

March 16 (Bloomberg) -- Euro-area finance ministers agreed to tax bank deposits in Cyprus in an unprecedented measure to forge a 10 billion-euro ($13 billion) rescue plan.

Cyprus will impose a levy of 6.75 percent on deposits of less than 100,000 euros -- the ceiling for European Union account insurance -- and 9.9 percent above that. The measures will raise 5.8 billion euros in addition to the emergency loans, Dutch Finance Minister Jeroen Dijsselbloem, who leads the group of euro-area ministers, told reporters early today after 10 hours of talks in Brussels.

The European Central Bank will make funds available to the region’s banks as needed to counter potential bank runs. Depositors will receive bank equity as compensation. Finance Minister Michael Sarris said the plan was the “least onerous” of the options Cyprus faced to stay afloat.

“It’s not a pleasant outcome, especially of course for the people involved,” Sarris said in Brussels at 4:55 a.m.

Funds to pay the levy were frozen in accounts immediately, ECB Executive Board Member Joerg Asmussen said. The levy will be assessed before Cypriot banks reopen on March 19 after a March 18 national holiday. Sarris said electronic transfers will also be limited until then.

“As it is a contribution to the financial stability of Cyprus, it seems just to ask a contribution of all deposit holders,” Dijsselbloem said, noting the country’s financial industry was five times the size of its economy. The plan includes “unique measures” that address the “exceptional nature” of Cyprus and show “inflexible commitment to financial stability and the integrity of the euro area.”

Asmussen said tapping deposit holders was needed to expand Cyprus’s tax base. European Union Economic and Monetary Affairs Commissioner Olli Rehn called the assessment a strictly fiscal measure. Rehn had warned against so-called haircuts on depositors to avoid setting a destabilizing precedent.

When asked if a deposit assessment could be ruled out for future rescues, Rehn said in an interview: “It can and there is no concrete case where it should be considered.”
 

THRILLHO

Registered User
Apr 5, 2009
879
1,094
348
Bothell, Wa.
#2
If you were going to kick a country in the balls, Cyprus would be it. You know they have no spine cause they've been occupied for decades​
 

KRSOne

Registered User
Dec 8, 2011
12,962
2,967
258
Sunnydale
#5
Coming to a bank near you if Obama has his way.
I think its gone too far for anyone to stop it from happening. It will happen in the US at some point.

"The problem with socialism is that eventually you run out of other people's money [to spend]."
 

SKEPTIC

Those who believe in telekinetics, raise my hand.
May 12, 2007
3,181
1,870
488
1060 W. Addison St., Chicago, Illinois, 60613
#7
The parliament of Cyprus rejected this today. Not a vote in favor. Not one. 36 No votes. And 19 abstentions which came from the MPs of the president's party.

http://www.bloomberg.com/news/2013-...it-levy-in-blow-to-european-bailout-plan.html

/clapping hands

Apparently, despite having restrictive gun laws, the Cypriots are more well armed then I thought. And there's a lot of Russian mob money there. You don't want to steal money from them. Seriously.

Good for them in telling the Three Stooges (EU, ECB, IMF) where to go.
 
Last edited:

KRSOne

Registered User
Dec 8, 2011
12,962
2,967
258
Sunnydale
#8
The bankers aren't going to be happy about that. I wonder what their next move will be? They can't use military action on white people, can they?
 

Buster H

Alt-F4
Wackbag Staff
Dec 6, 2004
12,243
2,725
678
Lower Bucks Co, PA
#12
This shit does scare the hell out of me. I have well over a quarter million in my 401k and am on track to have over a million in assets by the time I retire.

With my luck, the dollar will have the same worth as SatansCheerledr likes and ill be able to buy a loaf of bread with it if the govt doesn't seize it all.
 
Jun 30, 2005
10,801
2,011
681
outsiddah Boston
#13
NO shit...it amazing that we have to plan for a zero assistance retirement and still fear the fiscal reaper...I have 401k and a brokerage account and hope that in the next 25 years I can get it to the level that I can die with just enough money to bury myself without having to put my kid in debt....

Fucking taxes...
 

SatansCheerledr

Ideologically Unsound
Apr 6, 2005
15,106
7,564
716
I Will Pay Snakes To Bite You
#14
This shit does scare the hell out of me. I have well over a quarter million in my 401k and am on track to have over a million in assets by the time I retire.

With my luck, the dollar will have the same worth as SatansCheerledr likes and ill be able to buy a loaf of bread with it if the govt doesn't seize it all.
I would happily exchange my likes for a packet of roast ox tail flavoured crisps.
 
May 24, 2004
3,231
503
608
Queens, NY
#20
UPDATE!!1!

There are now rumors that deposits above 100,000 euros could be confiscated in their entirety (YIKES!). Eat your peas, rich people!
UPDATE 1-Cyprus and EU/IMF agree draft proposal to rescue banks
Sun Mar 24, 2013 8:27pm EDT

BRUSSELS, March 25 (Reuters) - Cyprus, the European Union and the International Monetary Fund have agreed a new plan to try to resolve the island's shattered banks and finance a rescue of the country, EU officials said early on Monday.

Deposits below 100,000 euros in Laiki will be transferred to Bank of Cyprus, the country's largest bank. Deposits above 100,000 euros, which under EU law are not insured, will be frozen and will be used to resolve debts. It remains unclear how large the writedown on those funds will be.

No charges will be incurred against any Cypriot bank account with less than 100,000 euros in them, the officials said.

The plan is likely to mean very heavy losses for uninsured deposits in Laiki, which has suffered since writing down the value of its holdings of Greek government bonds last year.

(Reporting by Annika Breidthardt and Jan Strupczewski; Writing by Luke Baker, editing by Mike Peacock)

http://www.reuters.com/article/2013/03/25/us-cyprus-parliament-idUSBRE92G03I20130325
DJ Cyprus, Troika Reach Consensus on Key Parameters of Deal-EU Source

By Serena Ruffoni, Stelios Bouras and Matina Stevis Cyprus
DOW JONES NEWSWIRES

BRUSSELS--Cyprus and its international creditors have reached a preliminary
agreement outlining key elements of a restructuring plan on its banking system,
in a bid to open the path for a bailout agreement, a senior European Commission
official said Monday.

Those with depositors in Cypriot banks under EUR100,000 won't be affected,
the official added.

The proposal, which emerged from a series of meetings between the
International Monetary Fund, European Union and the European Central Bank, also
known as the troika, and Cyprus President Nicos Anastasiades, also includes the
resolution of Laiki Bank, also known as Cyprus Popular Bank.

The Cypriot lender, the country's second largest, will be split into a good
and a bad bank.

The official said there will be no imposition of a levy on bank deposits,
instead there will be a "bail in" affecting senior bank bondholders as well as
the junior creditors that were already targeted by the original plan.

He added there was no firm decision on whether any other bank would also be
subject to a bail-in. However, a second person familiar with the discussions
said there was a tentative deal to bail-in deposits over EUR100,000 at the Bank
of Cyprus. The size of the losses for those depositors is still to be decided
but expected to be "large", the person said.
 
May 24, 2004
3,231
503
608
Queens, NY
#22
UPDATE!!!!

If you are a fan of old-fashion bank runs, tomorrow will be your day. Civil unrest and a heavy-handed police response are also in store. Should be a fun preview of what's to come for the rest of Europe.
WRAPUP 1-Cyprus reopens banks, under strict restrictions
By Karolina Tagaris and Michele Kambas

NICOSIA, March 28 (Reuters) - Cypriots are expected to descend in their thousands on Thursday on banks, which reopen with tight controls imposed on transactions to prevent fleeing depositors from cleaning out the vaults in a catastrophic bank run.

The east Mediterranean island fears a stampede at banks almost two weeks after they were shut by the government as it negotiated a 10 billion euro ($12.78 billion) bailout package with the European Union to escape financial meltdown.

The rescue deal is the first in Europe's single currency zone to impose losses on bank depositors, raising the prospect that savers will panic and scramble to get at their cash.

Authorities insist that strict rules imposed to prevent a bank run will be temporary, but economists say they will be difficult to lift as long as the economy is in crisis.

On Wednesday night, container trucks loaded with cash pulled up inside the compound of the central bank in the capital Nicosia to prepare for the reopening, a Cyprus central bank source said. A helicopter hovered overhead and police with rifles were stationed around the compound.

As in all countries that use the euro, Cyprus's central bank supplies cash for its banks from the European Central Bank in Frankfurt. Officials have promised that enough funds will be on hand to meet demand. The ECB did not comment on reports it had sent extra cash to the island.

Strict controls, contained in a Finance Ministry decree, limit cash withdrawals to no more than 300 euros per day, ban the cashing of cheques and bar businesses from transferring money abroad unless they can show it is for imports.

The island's central bank will review all commercial transactions over 5,000 euros and scrutinise transactions over 200,000 euros on an individual basis. People leaving Cyprus can take only 3,000 euros with them.

With just 860,000 people, Cyprus has some 68 billion euros in its banks - a vastly outsized financial system that attracted deposits from foreigners as an offshore haven but foundered after investments in neighbouring Greece went sour.

(...)

A 42-year-old Romanian hotel maid, who gave her name as Maria, said she was worried she would not be able to cash her pay cheque due on Friday. The hotel, she said, was unable to pay staff in cash because most guests paid by credit card.

"What shall I do?" she asked. "Hold up the cheque and look at it?"

($1 = 0.7824 euros)
(Additional reporting by Laura Noonan and Costas Pitas; Writing by Matt Robinson; Editing by Peter Graff)

http://www.reuters.com/article/2013/03/28/us-cyprus-parliament-idUSBRE92G03I20130328
 

Norm Stansfield

私は亀が好きだ。
Mar 17, 2009
15,949
4,075
328
#23
To everyone criticizing the ECB and EU on this: what would you suggest they do instead? Please, feel free to make any suggestion, from nothing all the way to nuking Cyprus. Just make sure to also mention what the result of your suggestion would be.

P.S. The thread title is inaccurate. What really happened was that the EU offered to bail out failing Cypriot banks, and as a condition requested Cyprus to tax bank deposits 10%, so that it can put up 25% of the bailout money (with European taxpayers putting up the rest).

And I agree, the EU is wrong to do this. What they should've done, instead, is request Cyprus to tax bank deposits by 40%, and bail out their banks by themselves (this is essentially the "nothing" alternative, since the EU wouldn't actually be doing anything, they would just be offering a piece of helpful advice - and, of course, giving the Cyprus politicians who caused all this the opportunity to do what they did now: blame the move on the EU).

Had the EU refused to give them a handout, they would've had no choice but to follow this advice, because the alternative is the failure of those banks, and with it the total shutdown of Cyprus' economy (without the use of electronic money, any modern economy would be wiped out).
 
Last edited:

Norm Stansfield

私は亀が好きだ。
Mar 17, 2009
15,949
4,075
328
#24
The parliament of Cyprus rejected this today. Not a vote in favor. Not one. 36 No votes. And 19 abstentions which came from the MPs of the president's party.

http://www.bloomberg.com/news/2013-...it-levy-in-blow-to-european-bailout-plan.html

/clapping hands

Apparently, despite having restrictive gun laws, the Cypriots are more well armed then I thought. And there's a lot of Russian mob money there. You don't want to steal money from them. Seriously.

Good for them in telling the Three Stooges (EU, ECB, IMF) where to go.
I don't think that's a good way to describe what's going on here: the EU is about to give Cyprus a bunch of money. The disagreement is about how much. The EU is offering to give them 75% of what they need, and Cyprus wants 100%.

The reason why the EU can't afford to give them 100% is because that would encourage other countries to also spend all their money (actually, money they don't have) at a rate of 45% of GDP/year, and then bankrupt their financial industry by encouraging them to hand out bad loans. Eventually, the EU would just run out of bailout money. So they wanna make it hurt a little.

Like I said, I would prefer that they instead make it hurt a lot, by letting Cyprus raise all the bailout money. But that's not gonna happen, because it would look bad on television.
 

Norm Stansfield

私は亀が好きだ。
Mar 17, 2009
15,949
4,075
328
#25
It'll happen here. And half the population will take it.
Wouldn't happen here. The US doesn't need to tax bank accounts directly, because it can (and DOES SO, ALL THE TIME) do so indirectly: increasing the supply of M0 currency ("printing" new money) is in fact a tax on people who own dollars.

Cyprus needs to tax those bank deposits directly to raise money because it doesn't have the power to just create new Euros and hand them out to its failing banks.

I would think that the fact that most countries can and do levy an indirect tax on bank deposits puts this move in a little perspective. This is no more crazy or unprecedented than the US bailout in '08, or any other bailout in the history of big government. It's just the same old central planning through theft that's been going on for a long time. It's not setting any dangerous precedents, it won't scare away capital, etc., etc. It's business as usual, and, aside from some temporary panic by people who aren't well informed, the market will treat it as such.