ATMs drained as bailout tax triggers run on bank deposits
In a move that could set off new fears of contagion across the eurozone, anxious depositors drained cash from ATMs in Cyprus on Saturday, hours after European officials in Brussels required that part of a new €10 billion ($12.6 billion) bailout must be paid for directly from the bank accounts of savers.
The move - a first in the three-year-old European financial crisis - raised questions over whether bank runs could be set off elsewhere.
Jeroen Dijsselbloem, president of the group of euro-area ministers, on Saturday declined to rule out taxes on depositors in countries beyond Cyprus... Although banks placed withdrawal limits of €400 on ATMs, most of them had run out of cash by early evening. People around the country reacted with disbelief and anger... ''This is a clear-cut robbery,'' said Andreas Moyseos, a former electrician who is a pensioner in Nicosia, the capital...
...[The seizure] came with almost no warning at the beginning of a three-day religious holiday... Under an emergency deal reached early on Saturday in Brussels, a one-time tax of 9.9 per cent is to be levied on Cypriot bank deposits of more than €100,000 effective on Tuesday, hitting wealthy depositors - mostly Russians who have put vast sums into Cyprus's banks in recent years. But even deposits under that amount would be taxed at 6.75 per cent, meaning that Cyprus's creditors will be confiscating money directly from pensioners, workers and regular depositors to pay off the bailout tab...
This is an idiotic step and one that could trigger bank runs throughout Europe.
Oh. And think it can't happen here? There are steps that our own federal government is taking that say otherwise.