Join TSR now to have your say on this topicSign up now

Cyprus bailout - Up to 10% being taken from savings Watch

    • Thread Starter
    Offline

    0
    ReputationRep:
    People rushing to banks to withdraw and can't access their funds...

    Cypriots reacted with shock that turned to panic on Saturday after a 10% one-off levy on savings was forced on them as part of an extraordinary 10bn euro (£8.7bn) bailout agreed in Brussels.

    People rushed to banks and queued at cash machines that refused to release cash as resentment quickly set in. The savers, half of whom are thought to be non-resident Russians, will raise almost €6bn thanks to a deal reached by European partners and the International Monetary Fund (IMF). It is the first time a bailout has included such a measure and Cyprus is the fifth country after Greece, the Republic of Ireland, Portugal and Spain to turn to the eurozone for financial help during the region's debt crisis. The move in the eurozone's third smallest economy could have repercussions for financially overstretched bigger economies such as Spain and Italy.

    People with less than 100,000 euros in their accounts will have to pay a one-time tax of 6.75%, Eurozone officials said, while those with greater sums will lose 9.9%. Without a rescue, president Nicos Anastasiades said Cyprus would default and threaten to unravel investor confidence in the eurozone.

    http://www.guardian.co.uk/world/2013...posed-eurozone
    The deal, announced early Saturday, marks the first time in the euro zone's five-year-old financial crisis that depositors in bloc's banks will lose money. Accounts with more than €100,000 will be taxed at 9.9%, those with less at 6.75%, raising an expected €5.8 billion for the near-bankrupt nation.

    [...]

    Mr. Sarris said the Cypriot Parliament would adopt the taxes over the weekend and the money would be extracted from accounts before banks take up business Tuesday. Monday is a public holiday. "We have taken immediate measures so that electronic transfers cannot take effect before banks reopen on Tuesday," said the minister, who took office just two weeks ago.

    http://online.wsj.com/article/SB1000...039767150.html
    Nobel laureate warns of economy instant collapse if memorandum is not accepted

    Pissarides told CNA “the truth is hard to swallow. If the law is not approved tomorrow the consequences will be much worse. There will be large scale bankruptcies and most small Cypriot bank depositors will lose everything, because they will discover that their banks will not open again.”
    And this, he stressed, “will not happen in some vague future date; it will happen now, this week. Our economy will collapse”.
    Full statement from Cyprus' President:

    Statement by the President of the Republic Mr Nicos Anastasiades
    16/03/2013

    It is well known that the deep economic crisis and the state of emergency in which the country has found itself did not come about in the last fortnight since we have undertaken the administration of the country.

    The state of emergency and critical nature of the times do not allow me, as they do not allow anyone, to embark on a blame game.

    In the extraordinary meeting of the Eurogroup, we faced decisions that had already been taken and came across faits accomplis through which we were faced with the following dilemmas:

    On Tuesday, March 19 we would either choose the catastrophic scenario of disorderly bankruptcy or the scenario of a painful but controlled management of the crisis, which would put a definitive end to the uncertainty and restart our economy.

    A possible choice of the catastrophic scenario option would have the following consequences:

    1. On Tuesday, March 19, immediately after the holiday weekend, one of the two banks in crisis would cease to operate, since the European Central Bank, following the decision already taken, would terminate the provision of liquidity. The second bank would suspend its work, and neither could avoid collapse. Such a phenomenon would instantly lead 8.000 families to unemployment.

    2. The State would be obliged to compensate depositors in response to the obligation regarding guaranteed deposits. The capital required in such a case would amount to about 30 billion euros, which the State would be unable to pay.

    3. A proportionate amount corresponding to the deposits of thousands of depositors for deposits over 100.000 Euro, would be led to a vicious cycle of asset liquidation, and these depositors would suffer losses of over 60%.

    4. Such an uncontrolled situation would push the whole banking system into collapse with all the attendant consequences.

    5. Thousands of small and medium enterprises, and other businesses would be driven to bankruptcy due to their inability to trade.

    As a result of the above, the service sector would be led to a complete collapse with a possible exit from the euro. That, in addition to the national weakening of Cyprus, would lead to devaluation of the currency by at least 40%.

    The second choice was the controlled management of the crisis, through the decisions taken and which can be summarized as follows:

    1. Ensuring the liquidity of the banks and the rescue of the banking system through their recapitalization.

    2. Rescuing 8.000 jobs in the banking sector and thousands of others which would be lost as a corollary of not maintaining the operations of banks.

    3. Total rescuing of deposits, with just the exchange of a small percentage of savings with shares of the two banks. Currently, these shares do not have their full value, but with the economic recovery they will repay most it not all of the amount that will be cut.
    4. This option results in a drastic reduction of public debt, makes it manageable and sustainable and relieves future generations from the burden of repayment.

    5. It saves provident and pension funds and avoids taking other tough measures such as wage and pension cuts that were put on the negotiations table.

    6. It avoids further recession and the risk of the vicious circle of a second memorandum.

    We are not aiming to gloss over the situation. The solution chosen may be painful, but it was the only one that would allow us to continue our lives without adventures. It's a decision that leads to the historic and permanent rescue our economy.

    In the next few hours we will all have to take responsibility. Tomorrow I will address the Cypriot people.
    This is basically another 'Greece'. Dark times for the country. Even darker times if this fear spills into Portugal, Spain and Italy and they make bank runs.
    Offline

    4
    ReputationRep:
    Revolution needed.

    Posted from TSR Mobile
    • Political Ambassador
    Offline

    5
    ReputationRep:
    (Original post by TheFrozenLake.)
    Revolution needed.

    Posted from TSR Mobile
    To do what....
    Offline

    2
    ReputationRep:
    (Original post by Aj12)
    To do what....
    He's probably hoping that they can do a 1917 Russia, and suddenly reject all owed debts and dues.
    Escaping reality rather than dealing with it.
    Offline

    2
    ReputationRep:
    (Original post by Pedd)
    He's probably hoping that they can do a 1917 Russia, and suddenly reject all owed debts and dues.
    Escaping reality rather than dealing with it.
    I don't think that anyone hopes for another october revolution. Too much blood and misery.
    Offline

    4
    ReputationRep:
    (Original post by Pedd)
    He's probably hoping that they can do a 1917 Russia, and suddenly reject all owed debts and dues.
    Escaping reality rather than dealing with it.
    Dealing with at the expense of the general population who had nothing to do with this.

    Posted from TSR Mobile
    Offline

    2
    ReputationRep:
    (Original post by TheFrozenLake.)
    Dealing with at the expense of the general population who had nothing to do with this.

    Posted from TSR Mobile
    Unfortunately, yes. The problem is that regardless of whether or not they are at fault, rioting and revolting will not solve the problem. The world can afford to chase them until they pay-up.

    I wish that the economic issues around Europe and America at the moment, nearly all of which are not the fault of the people, could be written off.

    Sadly, reality isn't always fair. Greece needs to calm down and take the necessary measures to start to fix its problems. Otherwise it will never be allowed to recover.
    Offline

    4
    ReputationRep:
    (Original post by Pedd)

    Sadly, reality isn't always fair. Greece needs to calm down and take the necessary measures to start to fix its problems. Otherwise it will never be allowed to recover.
    Do you think the same people who caused the mess should be given a second chance?

    And another one after that?

    To me it's just friends bailing out friends when they have messed up, Which is not right.


    Posted from TSR Mobile
    Offline

    2
    ReputationRep:
    (Original post by TheFrozenLake.)
    Do you think the same people who caused the mess should be given a second chance?

    And another one after that?

    To me it's just friends bailing out friends when they have messed up, Which is not right.


    Posted from TSR Mobile
    It's not fair. However, unless the people go through the proper channels with a comprehensive alternative plan, all that can be achieved via revolution is further pain. I'm not sure that many potential-tourists or companies would like to invest in such a politically unstable country.

    What would of happened to our chances of recovery if we in Britain acted in such a knee-jerk fashion in 2008?
    Offline

    0
    ReputationRep:
    Time to store my cash inside my mattress instead of in banks I think, what with this and negative interest rates being suggested.
    Offline

    1
    ReputationRep:
    The two main Cyprus banks in real danger of collapse; the Brit solution(of old) use taxpayers money to bail them out, Cyprus has insufficient numbers for such so Plan 2, hammer the depositors to protect the bond holders.

    Simple Capitalist logic.
    Offline

    12
    It's politics 101 that this will be a complete disaster, responsible people having thousands taken off of them. I hope George Osbourne doesn't get any ideas...
    • Community Assistant
    Offline

    21
    ReputationRep:
    I'd point out that this is actually a swap, they get equivalent shares in the banks (oh the irony) but yes, this is a poor policy and given the small size of Cyprus i'd rather see a default.
    Offline

    2
    ReputationRep:
    (Original post by Rakas21)
    I'd point out that this is actually a swap, they get equivalent shares in the banks (oh the irony) but yes, this is a poor policy and given the small size of Cyprus i'd rather see a default.
    you mean shares in banks that need bailouts? :P
    Offline

    2
    ReputationRep:
    They can't afford to pay up using legitimate means so they'll just steal the money. I'm not surprised the people of Cyprus are up in arms. I'm angry for them and it's not even my money. Who the hell wants shares in a failing bank in exchange for a huge proportion of their savings?
    • Community Assistant
    Offline

    21
    ReputationRep:
    (Original post by jakemittle)
    you mean shares in banks that need bailouts? :P
    I'm not sure they have, it's the Cypriot state that needs the bailout.
    Offline

    0
    ReputationRep:
    Bitcoin users not affected
    Offline

    19
    ReputationRep:
    I wonder if Cyprus still features in the Daily Telegraph's list of recommended tax havens:
    http://www.telegraph.co.uk/finance/p...ns-Cyprus.html

    What I don't get is why these countries that are associated with low tax, eg Cyprus, Ireland and in the case of Greece, low rates of tax collection, aren't thriving economies? Surely their low tax rates encourage hard work and enterprise and their economies should be flying?
    Offline

    16
    ReputationRep:
    I saw this and thought it rather good:

    Spoiler:
    Show
    [img]http://thebearded*******dotorg.files.wo rdpress.com/2013/03/bfplxn5cmaayy-c.jpg?w=660[/img]
    Offline

    2
    ReputationRep:
    It seems to not be going very smoothly. They are now keeping the banks closed till Thursday while they try to sort out a rehash. British pension payments are not being sent to Cyprus until it is sorted. The IMF are monitoring Spain and Italy for runs on their banks, with an assurance that this is a 'one off' and won't happen there. Not an assurance I would have much confidence in, particularly if they get away with this one.
    http://www.guardian.co.uk/business/2...ailout-package
 
 
 
Poll
Which Fantasy Franchise is the best?
Useful resources

The Student Room, Get Revising and Marked by Teachers are trading names of The Student Room Group Ltd.

Register Number: 04666380 (England and Wales), VAT No. 806 8067 22 Registered Office: International House, Queens Road, Brighton, BN1 3XE

Quick reply
Reputation gems: You get these gems as you gain rep from other members for making good contributions and giving helpful advice.