Cyprus Gets Bailout as Depositors Suffer Surprise Tax

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Bank of GreeceBy Shepard Ambellas
dev-test.intellihub.com

March 16, 2013

ATHENS — Cyprus, one of the smallest nations in the Eurozone (which requested an emergency bailout since 2012) will now get it.

In late response to the request, the International Monetary Fund (IMF), European Central Bank, and the European Commission have now imposed a new surprise tax that will take monies directly from the bank accounts of savers, in what some would say is a mafia style strong-arm maneuver against the best interests of Greek citizens.

In fact people are flocking to banking institutions and ATM’s like madmen to withdraw as much loot as they can from their accounts as the decision has been made from above.

The president President, Nicos Anastasiades calls the decision “painful”.

An excerpt from a report by Liz Alderman reads;

Cypriot banks are loaded up on bad loans made to Greek companies and individuals, which have turned sour at an alarming rate as Greece deals with the fourth year of a devastating economic and financial crisis.

“I’m not surprised that people are trying to get their money out in Cyprus; that is entirely to be expected,” Mr. Kirkegaard said. “They wake up Saturday morning and are told on the radio their bank deposits are at risk.”

James Canter lays out just what went down as follows, “In the early hours of Saturday morning, after 10 hours of talks, finance ministers from euro area countries, the International Monetary Fund and the European Central Bank agreed on terms that include a one-time tax of 9.9 percent on Cypriot bank deposits of more than 100,000 euros, and a tax of 6.75 percent on smaller deposits, European Union officials said.

“It’s not a pleasant outcome especially for the people involved,” Michalis Sarris, the Cypriot finance minister, told reporters. “This is a once and for all levy,” he added, saying it should ensure no further flight of depositors from Cypriot banks.

Jeroen Dijsselbloem, the president of the group of ministers, told a separate news conference that lenders had reached “a political agreement” to aid Cyprus. The challenges to reaching a deal were “of an exceptional nature,” he said.

The latest bailout for the euro zone broke new ground by requiring haircuts, or losses, for all Cypriot bank depositors. A previous bailout for Greece required a significant haircut for Greek bondholders in early 2012 — something that European Union officials said at the time would be a one-of-a-kind measure.”

Will this bailout and surprise tax set precedence for what could become a new trend of government and banker looting?

 

Sources:

^http://www.nytimes.com/2013/03/17/business/global/facing-bailout-tax-cypriots-try-to-get-cash-out-of-banks.html?hp

^http://www.nytimes.com/2013/03/16/business/global/showdown-looms-over-cyprus-bailout-deal.html

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