NEW YORK TIMES: A one-time levy of 20 percent would be placed on uninsured deposits at one of the nation’s biggest banks, the Bank of Cyprus, to help raise 5.8 billion euros demanded by the lenders to secure a 10 billion euro, or $12.9 billion, lifeline. A separate tax of 4 percent would be assessed on uninsured deposits at all other banks, including the 26 foreign banks that operate in Cyprus.
An agreement was still far off, though, as Cyprus’s lenders left for the night without reaching an accord. The proposal still requires approval by the Cypriot Parliament and by the European Central Bank, International Monetary Fund and European Union leaders. Finance ministers from the 17 euro zone countries have scheduled an emergency meeting at 6 p.m. Sunday in Brussels.
Under the plan, savings under 100,000 euros would not be touched — a rollback after a controversial plan last week to tax insured deposits was rejected by Cyprus’s Parliament, amid outrage among ordinary savers and widespread concern that a precedent had been set for governments anywhere to tap insured bank savings in times of a national emergency… (more)
EDITOR: What a dangerous precedent. Whenever a nation faces economic problems, banks will be subject to massive withdrawals. Euros will flow from the south of Europe to the stronger economies of the north. Where countries are not on the euro, presure will be put on the value their currency as huge sums are converted into dollars or euros and deposit elsewhere.
