Shock in Cyprus as Savers Face Bailout Levy

Via: BBC

16 March 2013

People in Cyprus have reacted with shock to news of a one-off levy of up to 10% on savings as part of a 10bn-euro (£8.7bn; $13bn) bailout agreed in Brussels.

Savers could be seen queuing at cash machines amid resentment at the charge.

The deal reached with euro partners and the IMF marks a radical departure from previous international aid packages.

President Nicos Anastasiades defended it as a “painful” step, taken to avoid a disorderly bankruptcy.

The Cypriot leader, who was elected last month on a promise to tackle the country’s debt crisis, will address the nation on Sunday.

Lenders are said to be gambling that the risk of a bigger banking crisis elsewhere in the eurozone has receded.

While Cyprus may be one of the eurozone’s tiniest economies – its third-smallest – there could be serious repercussions for other financially over-stretched economies, such as those of Spain and Italy, Robert Peston writes.

The point of the levy is as a caution to lenders to banks that they should take care where they place their funds, and avoid banks that overstretch themselves – as Cypriot banks did, he adds.

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.

Read more: here

Thank goodness nothing like this could happen in America!
-Moose

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