FINANCIAL TIMES Editorial: Just as the eurozone had begun to set the right course in its struggle with an ever-mutating debt crisis, it relapsed into its old vice. Faced with a drowning member state, instead of throwing Cyprus a lifebuoy, leaders put a millstone around its neck.
Appearances notwithstanding, the Cyprus deal does not “bail-in” creditors in an orderly resolution of bankrupt banks. Instead it imposes a tax on all depositors down to the smallest ones. However legal it may be, this rank violation of the spirit of deposit insurance – small savers in the EU are guaranteed that deposits up to €100,000 are safe regardless how moribund their bank – unforgiveably betrays those with the most to lose and the least to answer for.
It is also contrary to a future European banking system in which taxpayers are shielded from the losses of banks; investors pay for the risks they take in a predictable order of priority; and savers can trust that deposits up to the insurance limit are protected… (more)
