KalashnikovMarine wrote:
This only justifies my decision to keep all my money in a coffee can.

djones520 wrote:

 azazel the cat wrote:

whembly wrote:Also, I think the biggest issue is what's going to happen on Monday/Tuesday at the other countries looking for a bailout? It doesn't take much to start a run at the bank.

Yes it does. A couple years ago there was a warning from a few economists that a handful of unnamed US banks were on the verge of collapse, and yet still there was no run on the banks.

Ummm... no one was forcibly taking peoples money then though. That's what the potential bank run could be for. If they can do it to Cyprus, why not Greece, or Spain, or Ireland?

As you probably already know by now, the banking system of Cyprus has imploded, and Europe has stepped in to provide, not a "bail-out", but a "bail-in": the banks get a capital infusion, but the depositors have to take a haircut, losing between 7-10% of the value of their bank account. That's not exactly what they're calling it, of course; it's a "special bank levy" of 6.75% on accounts up to 100,000 (the limit for deposit insurance) and about 10% on accounts above that limit.

The depositor haircuts seem to have been necessary to get political support for the deal in the EU--and political support in the EU was necessary because Cypriot banks had assets somewhere in the neighborhood of 8 times the Gross Domestic Product of Cyprus. And just to bring it full circle, the banking system had grown to such grotesque, hypertrophied proportions because Cypriot bank accounts seem to be a favorite of tax-dodging Russian oligarchs . . . which is why it was politically necessary to give depositors such a large haircut.

From a technical, economic, perspective, however, this looks to be disastrous. If we are not yet having full-scale runs on Cypriot banks, we've at least worked up to a pretty brisk jog. No banking system can survive a bank run; if everyone tries to get their money out at once, even the soundest, most prudently managed bank in the world will fail, because they can't liquidate their loan assets fast enough to keep the cash moving out the door.

The decision to place a levy on insured accounts, in particular, seems extremely foolish. Note that it may have been necessary to prevent a run on the foreign accounts, which by some reports constitute about a third of total deposits. But if violating the deposit guarantees was necessary to implement your "tax the Russians to pay for the bank bailout plan", that should have been a sign that the plan was a bad idea.

Deposit insurance is the one way we know to stop a bank run. Oh, the government can say that this was a one-time thing, but once you've broken your promise once, what's to stop you from doing it again? It's bad enough to slam middle-class savers in order to put a smaller levy on Russian oligarchs, but it's insane to do so when you're actually making it less likely that your bank bail-in will succeed. And at this point, the whole scheme is looking extremely shaky.

It's foolish for Europe, too. If Cyprus had done this on its own, the country would be in trouble, but the rest of the world would just emit a bemused sigh and move on. Now, however, this plan has the[color=orange] imprimatur of the EU stamped on it--and so people are going to be looking hard at other European banking systems. Which other nations' depositors might have to take a similar haircut in the future? [/color]

Hopefully, savers will view Cyprus as an extreme one-off: a tiny nation whose banking system was unsustainably oversized for its economy, and whose substantial depositor base of kleptocratic foreigners made it uniquely difficult to deliver government support.

The problem is, Europe seems to be chock full of unique, one time problems with its banking system. There's a real risk that investors will decide that they'd rather not stick around to see what one-of-a-kind, custom-crafted solution the European ministers come up with next.

 whembly wrote:


So, saying that they were "duly elected" be the people voted for them seems dubious at best.

 Kovnik Obama wrote:

 whembly wrote:


So, saying that they were "duly elected" be the people voted for them seems dubious at best.[/quote

Well, I didn't say 'duly elected' for starters, neither did I mention 'the People'. I said they are elected by representatives from all the concerned nations. It's still a democratic process, so the question 'who elected those people' has a definite answer, more importantly, the sub-text of that question, which is something along the lines of 'well the concerned parties didn't vote for those peoples so hurr durr this decision is wrong!' can only be formulated as long as you remain in willful ignorance of the processes of the IMF and Eurozone.

Even as Cyprus's President Nicos Anastasiades addressed the nation on Sunday night, saying savers would be compensated by shares in banks guaranteed by future natural gas revenues, he was said to be working to renegotiate terms of the highly criticized bailout deal.
Over the weekend, analysts warned the decision by the euro zone to force bank depositors in Cyprus to contribute towards a bailout—a first in the euro zone debt crisis—could hurt other peripheral nations, the euro and the global stock market rally.

That warning appeared to be coming true as the euro edged lower at 1.2934 against the dollar, in early trade on Monday morning local time in New Zealand, the first global market to start trading.
In his televised address, Anastasiades said he had to accept a tax on bank deposits in return for international aid, or else the island would have faced bankruptcy.

"The solution we concluded upon is not what we wanted, but is the least painful under the circumstances," Anastasiades said.

In that speech, Anastasiades urged lawmakers to approve the tax in a vote Monday.

About 25 lawmakers from the communist-rooted AKEL party, the socialist EDEK and the Greens said they won't vote for the tax in the 56-seat Cypriot parliament amid deep resentment over a move some called disastrous. If Parliament rejects the tax, that would put the entire aid package in jeopardy. The vote was initially set for Sunday but was postponed until Monday—a national holiday in Cyprus.

The announcement of the vote postponement set off an immediate scramble among top European financial officials. One lawmaker told The Associated Press that European Central Bank was pressuring Cypriot authorities to hold the vote without delay.

Bailout is a 'Disaster'

Still, the structure of the bailout shocked many, including Sharon Bowles, chair of the European parliament's economic and monetary affairs committee, who called it a "disaster" for European Union rules and the single market.
(Read More: Cyprus Rescue Not a Fit for Other Countries)
Euro zone finance ministers forced Cyprus' savers to pay as much as 10 percent of their deposits towards a bailout of the country's troubled banking sector, a move which is expected to raise 5.8 billion euros. In return, the country will get 10 billion euros ($13 billion) in assistance.

The arrangement, structured as a bail-in, would give depositors shares in the banks in return for the levy.

According to the Financial Times, Cypriot authorities were trying to shift more of the burden to deposits larger than 100,000 euros, and adding an additional bank holiday on Tuesday to prevent a run on the nation's banks.
(Read More: Cypriot Authorities in Revised Deal Talks)

Sebastian Galy, senior currency strategist at Societe Generale warned the levy could unleash a sell-off in the euro and the stock and bond markets of peripheral nations on Monday.
"This will probably go down as an ill thought-out rescue plan with consequences for peripheral Europe," he wrote in a research note. "It breaks a cardinal rule, namely public trust on which money relies…Some peripherals will suffer at the opening in Europe and [it will] hit EUR."

Doug Kass of Seabreeze Partners on Twitter predicted European stock markets could fall 3 to 4 percent on Monday, while the S&P 500 could fall 1.5 to 2 percent and Spanish and Italian 10-year yields could jump 15 basis points.

"The news is a wake-up call to investors that the European sovereign debt issue is far from being resolved," Kass said in a note.
But Marshall Gittler, head of global forex strategy at IronFX, an online trading platform, took the opposite view, arguing the bailout could be positive for the single currency.

(Read More: Cyprus Parliament Postpones Key Session)

"This settlement—assuming it passes—removes that tail risk from the market. It also puts Cyprus on a healthy footing, with a debt/GDP ratio estimated at 93 [percent]—not far off the EU average of 90. The economy here can start growing again. So it's a win-win for the EU and Cyprus and should be well received by the markets," he said.

Meanwhile, The New York Times reported on Saturday that savers had already been trying to withdraw money from banks via ATMs and that many machines had run out of cash. But it might be too late already. Cyprus has declared a bank holiday on Monday to prevent such a run on the banks and banned electronic transfers.

Cyprus Finance Minister Michael Sarris defended the government's decision in an interview with CNBC: "It's not a pleasant outcome, especially of course for the people involved. But we believe it is something that, compared with other possible outcomes, is the least onerous. And we also believe that the exchange of this levy with shares in the banking institutions affected gives an upside potential."

But the rescue has already been thrown into doubt with Cyprus' parliament postponing an emergency session on Sunday to discuss the levy and several parties opposing the deal.

"When the dust has settled on this deal, which I hope it never does, we will see that the single market has been sold down the river for a shoddy price," said the EU parliament's Bowles

 whembly wrote:
Saw this on my twittah feed...

This seems really dangerous:

Europe Announces Stunning Bailout For Cyprus — Bank Depositors To Get Instant 10% Tax Before Banks Reopen This Week
Eurozone leaders and the IMF on Saturday announced an unprecedented levy on all deposits in Cypriot banks as the sting in the tail of a 10-billion-euro bailout for the near-bankrupt government in Nicosia.
Intended to apply to everyone from pensioners to Russian oligarchs alleged to have billions stashed away in what officials say is a bloated Cypriot banking sector, the "stability levy" immediately raised a flood of concerns among finance experts over a possible bank run in bigger eurozone economies, where fragile public finances are also under scrutiny.
Dutch Finance Minister Jeroen Dijsselbloem, after chairing some 10 hours of talks to strike the deal with counterparts including International Monetary Fund head Christine Lagarde and the European Central Bank's Mario Draghi, said the "upfront, one-off" tax is expected to raise 5.8 billion euros on top of the loans still to be finalised by eurozone parliaments.
The levy will see deposits of more than 100,000 euros in Cypriot banks hit with a 9.9 percent charge when lenders re-open their doors on Tuesday after a scheduled bank holiday on Monday. Under that threshold and the levy drops to 6.75 percent.
Top ECB official Joerg Assmussen said the only way to drive down what was originally requested as a 17-billion-euro rescue was to claw back money from the Cypriot banking sector, which is estimated to hold assets worth five times the country's economic output.
"In order to have burden-sharing, you extend the tax base," Asmussen said. "To residents and also to non-residents."
Lagarde said she would recommend that the IMF board now agree to chip in what one diplomat said could amount to another billion euros ($1.3 billion) in loans.
Lagarde said "the exact amount is not yet specified and will take a little bit of time" to arrive at.
Officials including the EU's economy and euro commissioner Olli Rehn also cited "positive" parallel talks with Russia on possibly easier terms on a 2.5-billion-euros loan it gave to the Cypriot government.
Cyprus Finance Minister Michalis Sarris will reportedly fly to Moscow for talks Monday about extending that loan, due to be repaid in 2016.
Under the deal, the Cyprus government will also have to hike corporate tax to 12.5 percent from 10 percent and sell off state assets so as to help balance the public finances.
"As it is a contribution to the financial stability of Cyprus, it seems 'just' to ask a contribution of all deposit-holders" to the rescue, Dijsselbloem said.
"The challenges we were facing in Cyprus were of an exceptional nature," the Dutchman said, under tough questioning from journalists at a press conference after the meeting in Brussels.
"We did what we had to," said French Finance Minister Pierre Moscovici on exiting the talks.
"It's something that compared to other possible outcomes, is the least onerous," said finance minister Sarris,
This arrangement notably meant his government "avoided salary and pension cuts" for public sector workers, he said.
Cyprus accounts for just 0.2 percent of the combined eurozone economy but officials said it had to be bailed out to safeguard the principle that no eurozone state could be allowed to default and so compromise the credibility and integrity of the single currency.
A "withholding tax" will also be imposed at source on interest earned in Cypriot banks in a further hit .
The talks had dragged on as the Cypriot government fought its ultimately doomed battle to avoid a "bail-in" or haircut, which it argued would trigger a run on its banks and ricochet on through the wider eurozone financial system.
Cyprus President Nikos Anastasiades attended the talks.
The Cyprus price tag is very small compared with two rescues for Greece worth some 380 billion euros ($496 billion), Ireland's 85 billion euros, Portugal's 78 billion and 41 billion for Spanish banks.
Russians are among the biggest investors in Cyprus, and hardline lenders like Germany had pressed for months for a clampdown on banks' alleged involvement in money laundering.
The total annual output of the Cypriot economy is 17 billion euros, and the IMF was concerned that a bailout on that level would take the country's debt burden to unsustainable levels.

Essentially, everybody with money in a bank gets loses an immediate 10% over the weekend, except those with less than 100,000 euros...those folks get jacked for 6.75% of their savings. Here's the sore point, the public sector workers are shielded from any cuts to salaries or pensions!

There.Will.Be.Riots.

I wonder if they did this on the weekend (banks are closed??) to prevent a run.
EDIT: Oh damn... just saw that the funds to pay for the levy were immediately frozen, before this was announced. o.O

 Grey Templar wrote:
Maybe on Monday we'll see the total collapse of the european banking system as everyone rushes to empty their accounts. The anticipation is killing me!

Steve steveson wrote:

 Grey Templar wrote:

The BoE is talking about setting a negative interest rate.

O'sure, Now there's a good idea

Nothing wrong with it. They are doing it in other country's. the idea is that banks are not lending enough and it is causing the economy to slow. Make it cost them to keep money and they will have to start lending.

 kronk wrote:

 KalashnikovMarine wrote:
This only justifies my decision to keep all my money in a coffee can.

I convert my left over savings to ones and deposit them in g-strings throughout Houston.

 azazel the cat wrote:

djones520 wrote:Ummm... no one was forcibly taking peoples money then though. That's what the potential bank run could be for. If they can do it to Cyprus, why not Greece, or Spain, or Ireland?

By that I take it you mean people are more likely to start a run on banks because of the prospect of an intentional tax, rather than the prospect of the bank's full collapse wherein those people lose everything?

 Grey Templar wrote:
That doesn't bode well.

And if I were a depositor in other countries facing a bailout I'd be even more worried about getting my money out of there.

Lest We Forget

The main issue is not Cyprus. Cyprus just happens to be the nation where the confiscation is to be enacted. Cyprus is the scapegoat. The European Union, the ECB and the IMF are the villains. Cyprus is the mostly unwilling recipient. What has taken place in Cyprus is far less important than the larger issue which is a forfeiture of private property being demanded by the nations on the Continent and by an international organization headquartered in Washington D.C. That would be in America.

"The leading banker in Amsterdam is now the pastry chef in our kitchen."

-Casablanca

In the case of the Greek default the country was told by the same organizations to retroactively change the covenants of their bond indenture. They did this. In the case of Cyprus, Europe has told this small nation to seize a portion of all of the bank accounts in the country so as to partially fund its debt. In both cases neither Greece nor Cyprus made the decisions; they were made by the European Union and forced upon the host countries by the threat of capital to be provided or not.

(AP) "Jean-Claude Juncker, head of the Eurogroup meeting of Eurozone finance ministers, has vowed that a Greek default was not an option and would be avoided even after Athens' admission that it would miss its deficit-reduction targets raised questions about whether it would receive its next bailout loan."

-October 3, 2011

Right up until the day it happened the President of Cyprus claimed it would never happen. Then, faced with bankruptcy, the fellow folded. I do not take a position here upon his actions, he has been in office for three weeks, but I do take a position upon the tyranny of the governmental bodies in question; they have demanded and forced the forfeiture of private property for their own betterment. I state with authority; if they can do it in Greece and then again in Cyprus they can do it anywhere and under any guise they like. They can wield the army of their pen, of their money, as an effective armament on the battlefield, to change what they like, when they like, all for the good of the State.

"Every collectivist revolution rides in on a Trojan horse of ‘emergency’. It was the tactic of Lenin, Hitler, and Mussolini. In the collectivist sweep over a dozen minor countries of Europe, it was the cry of men striving to get on horseback. And ‘emergency’ became the justification of the subsequent steps. This technique of creating emergency is the greatest achievement that demagoguery attains."

-Herbert Hoover

Deposit Insurance at a bank, any bank in Europe, is now meaningless. A bond indenture, any clause, any paragraph, any promise or assurance; now meaningless. The notion of private property, land, cash, house; now meaningless. The European Union will take what they want as they deem it necessary and the IMF will follow along. The question has been asked, during the last few days, why the bond holders of Cyprus were not tagged along with the bank deposits. I can answer the question. Virtually all of the Cyprus sovereign debt is governed under British law and so the EU did not pursue this course.

I recall the movie, Casablanca, where the Germans stood up to sing their National Anthem and the French responded with the "Marseilles." It is too bad that the French have forgotten how to sing this song but then, apparently, all of the nations in the EU have forgotten how to sing their own songs.

Greece came first. Lesson one and "shame on you." Cyprus comes second and now "shame on me." What will come next? What will you tell your partners or your shareholders when they say, "You should have known." You will have no excuse! The Europeans will take what they want and when they want it and to have money invested there now only has one excuse; masochism. Neither you nor I have any idea of what they might do next. When a government changes an indenture retroactively as a condition of funding and then demands that private property be seized as a condition of funding then this government, the European Union, will stop at nothing, find no boundary or fence, to halt its ambitions.

When Lesson three comes, and it will, I will not be kind. I will say; "I told you so!"

 Frazzled wrote:
If you do it to one you can do it to any of them. Investor faith in savings accounts in the EU where those accounts are guaranteed (IIRC they aren't guraranteed in the UK correct?) has been shattered. I'd expect international deposits to shift out of the EU, or at least an interesting portion of them for the near term.

 Kilkrazy wrote:
If they backtrack too much they won't be able to afford the Tau army they were planning.

 Frazzled wrote:
IIRC they aren't guraranteed in the UK correct?

Russian energy giant Gazprom has offered the Republic of Cyprus a plan in which the company will undertake the restructuring of the country’s banks in exchange for exploration rights for natural gas in Cyprus’’ exclusive economic zone, local media reported.

Representatives of the Russian company submitted the proposal to the office of Cypriot President Nicos Anastasiades on Sunday evening, Sigma TV reported.

The proposal states that Gazprom will fund the restructuring of the country’s crippled financial institutions in exchange for substantial control over the country’s gas resources while Cyprus won’t need to take the harsh bailout package offered by the EU.

EU offered a 10 billion euros rescue package to Cyprus with the condition of raising 5.8 billion euros ($7.5 billion) by taking a piece of every bank account in Cyprus. The originally proposed levies on deposits are 9.9 percent for acounts exceeding 100,000 euros and 6.7 percent on anything below that.

Cypriot President Nicos Anstasiades is not willing to discuss the Russian’s offer according to Newsit who cited an anonymous source close to the President.

“The president is not going to discuss this plan because he wants a solution that will come from the EU,” said the anonymous source.

Shortly after the rejection of the Gazprom proposal, Anatoly Aksakov, the head of the Association of Regional Banks of Russia and a member of the Board of the Central Bank of Russia spoke to Interfax describing the country’s banking system as “not trustworthy” and advised Russian citizens “to withdraw their deposits from Cyprus.”

“Our belief, that Cyprus is a place where it is convenient for people to keep their money, will be undermined if the Cypriot parliament passes the decision of Eurogroup» said Aksanov.

Cyprus’s Parliament has postponed its decision on whether it will go along with a tax of up to 9.9 percent on the savings of bank account holders as demanded by international lenders in return for a 10 billion euros ($13 billion) bailout to keep the island country’s economy from collapsing. The vote that was due to take place on March 17 was pushed back to Monday, a holiday in Greece and Cyprus, when banks would be closed in any case.

Gazprom is the largest extractor of natural gas in the world and the largest Russian company.

NICOSIA, Cyprus (AP) - Cypriot lawmakers on Tuesday rejected a critical draft bill that would have seized part of people's bank deposits in order to qualify for a vital international bailout, with not a single vote in favor.

The rejection leaves Cyprus's bailout in question. Without external funds, the country's banks face collapse and the government could go bankrupt. Nicosia will now have to come up with an alternative plan to raise the money: the government could try to offer a compromise bill that would be more palatable to lawmakers.

The bill, which had been amended Tuesday morning to shield small deposit holders from the deposit tax, was rejected with 36 votes against and 19 abstentions. One deputy was absent.

"No to new colonial bonds, no to subjugation, no to national dishonor and raw blackmail," said house speaker Yiannakis Omirou during the debate before the vote.

After the vote failed, he said political leaders will have a meeting with the president on Wednesday to discuss the next steps.

Nicholas Papadopoulos, the chairman of the parliamentary finance committee, said banks would remain closed "for as long as we need to conclude an agreement" but stressed this would be "in the next few days." Banks had been ordered to remain shut until Thursday while the bill was debated and amended, to prevent a bank run.

Papadopoulos said Cyprus wanted wants a renegotiation of its bailout deal.

But the idea of seizing savings was something Cyprus rejected. "It has not been (implemented) in any other country in Europe and we don't wish to be the experiment of Europe."

Hundreds of protesters outside Parliament cheered in jubilation and sang the national anthem when they heard the bill had not passed.

Under the original deal reached in Brussels late Friday to qualify for the 10 billion euro bailout from other eurozone countries and the International Monetary Fund, Cyprus had to raise 5.8 billion in additional funds by taxing all bank accounts. Those under 100,000 euros would pay 6.75 percent, and those above that amount would be taxed at 9.9 percent on their deposits.

Facing fury at home and from Russians who make up an estimated third of the total amount in Cypriot banks, the government amended the bill Tuesday to exempt small depositors with up to 20,000 in the bank.

But the change was not enough for lawmakers.

The country's central bank governor, Panicos Demetriades, had recommended that no accounts be taxed below 100,000 euros — the amount that are supposed to be insured by the state if a bank collapses.

"The credibility of, and trust in the banking sector depends on this," said Demetriades.

Although Cyprus is the smallest eurozone country to be bailed out, the details of the plan had sent shockwaves through the single currency area as it was the first time savers' banks accounts have been directly targeted. Other bailed out countries such as Greece, Ireland and Portugal have raised funds by imposing new taxes.

Proponents of the deposit seizure argued it would have made foreigners who have taken advantage of Cyprus's low-tax regime share the cost of the bailout of the banks, which have been hit hard by their over-exposure to bad Greek debt.

Finance Minister Michalis Sarris flew to Moscow Tuesday afternoon to meet with his Russian counterpart, arriving there shortly before the vote — and promptly dismissing rumors that he had offered to resign in the interim.

Andreas Charalambous, a senior official at the ministry, said the aim is to extend repayment of a €2.5 billion loan Russia granted Cyprus in late 2011 when the country could no longer borrow from international markets.

He said Cyprus was also looking for "potential interest for further investment in the country."

Opponents say a blanket charge on people's bank accounts will hurt ordinary Cypriots more, and could shake the confidence of all in the country's banking sector. And by going after deposits, European policymakers have set a precedent that could be repeated in the future. The worry of bank runs across Europe lies at the heart of market concerns.

Charalambous said Cypriot authorities believe depositors should be protected, but that a wholesale exemption for those below €100,000 would mean a "disproportionate" burden on large savers, and a "very detrimental" knock-on effect on economic growth.

"Because of the size of the estimated (bailout) needs, the burden on those above €100,000 would be such that it would again impact small people because it would destroy the ability of the country to attract foreign investment," Charalambous said.

In a Monday night teleconference, eurozone finance ministers concluded that small depositors should not be hit as hard as others. They said Cyprus should stagger the seizures more, but insisted that the overall take should stay the same.

President Nicos Anastasiades, who was elected less than a month ago, told German Chancellor Angela Merkel Monday night that "the possibility of reducing the requirements from self-raised funds is being explored," a Cypriot government spokesman said.

National planning Cyprus-style solution for New Zealand

The National Government are pushing a Cyprus-style solution to bank failure in New Zealand which will see small depositors lose some of their savings to fund big bank bailouts, the Green Party said today.

Open Bank Resolution (OBR) is Finance Minister Bill English’s favored option dealing with a major bank failure. If a bank fails under OBR, all depositors will have their savings reduced overnight to fund the bank’s bail out.

“Bill English is proposing a Cyprus-style solution for managing bank failure here in New Zealand – a solution that will see small depositors lose some of their savings to fund big bank bailouts,” said Green Party Co-leader Dr. Russel Norman.

“The Reserve Bank is in the final stages of implementing a system of managing bank failure called Open Bank Resolution. The scheme will put all bank depositors on the hook for bailing out their bank.

“Depositors will overnight have their savings shaved by the amount needed to keep the bank afloat.

“While the details are still to be finalized, nearly all depositors will see their savings reduced by the same proportions.

“Bill English is wrong to assume everyday people are able to judge the soundness of their bank. Not even sophisticated investors like Merrill Lynch saw the global financial crisis coming.

“If he insists on pushing through this unfair scheme, small depositors can be protected ahead of time with a notified savings threshold below which their savings will be safe from any interference.”

Dr. Norman questioned the Government’s insistence on pursuing Open Bank Resolution when virtually no other OECD country uses it.

“Open Bank Resolution is unprecedented in the world. Most OECD countries run deposit insurance schemes which protect people’s deposits up to a maximum ranging from $100,000 – $250,000,” Dr. Norman said.

“OBR is not in line with Australia, which protects bank deposits up to $250,000.

“A deposit insurance scheme is a much simpler, well-tested alternative to Open Bank Resolution. It rewards safe banks with lower premiums and limits the cost to taxpayers of a bank failure.

“Deposit insurance will, however, require the Reserve Bank to oversee and regulate our banks more closely – a measure which is ultimately the best protection against bank failure.”

 Breotan wrote:
It's already spreading.
http://www.scoop.co.nz/stories/PA1303/S00306/national-planning-cyprus-style-solution-for-new-zealand.htm

National planning Cyprus-style solution for New Zealand

The National Government are pushing a Cyprus-style solution to bank failure in New Zealand which will see small depositors lose some of their savings to fund big bank bailouts, the Green Party said today.

Open Bank Resolution (OBR) is Finance Minister Bill English’s favored option dealing with a major bank failure. If a bank fails under OBR, all depositors will have their savings reduced overnight to fund the bank’s bail out.

“Bill English is proposing a Cyprus-style solution for managing bank failure here in New Zealand – a solution that will see small depositors lose some of their savings to fund big bank bailouts,” said Green Party Co-leader Dr. Russel Norman.

“The Reserve Bank is in the final stages of implementing a system of managing bank failure called Open Bank Resolution. The scheme will put all bank depositors on the hook for bailing out their bank.

“Depositors will overnight have their savings shaved by the amount needed to keep the bank afloat.

“While the details are still to be finalized, nearly all depositors will see their savings reduced by the same proportions.

“Bill English is wrong to assume everyday people are able to judge the soundness of their bank. Not even sophisticated investors like Merrill Lynch saw the global financial crisis coming.

“If he insists on pushing through this unfair scheme, small depositors can be protected ahead of time with a notified savings threshold below which their savings will be safe from any interference.”

Dr. Norman questioned the Government’s insistence on pursuing Open Bank Resolution when virtually no other OECD country uses it.

“Open Bank Resolution is unprecedented in the world. Most OECD countries run deposit insurance schemes which protect people’s deposits up to a maximum ranging from $100,000 – $250,000,” Dr. Norman said.

“OBR is not in line with Australia, which protects bank deposits up to $250,000.

“A deposit insurance scheme is a much simpler, well-tested alternative to Open Bank Resolution. It rewards safe banks with lower premiums and limits the cost to taxpayers of a bank failure.

“Deposit insurance will, however, require the Reserve Bank to oversee and regulate our banks more closely – a measure which is ultimately the best protection against bank failure.”

 BryllCream wrote:
Yeah but the Cyriats want nothing to do with it. They may not like the EU much but they'll still opt for Europe over Russia any day.