{"id":19464,"date":"2013-03-16T11:23:11","date_gmt":"2013-03-16T16:23:11","guid":{"rendered":"http:\/\/quotulatiousness.ca\/blog\/?p=19464"},"modified":"2013-03-16T11:23:11","modified_gmt":"2013-03-16T16:23:11","slug":"the-cyprus-rescue-includes-nasty-haircut-for-savings-held-in-consumer-banks","status":"publish","type":"post","link":"https:\/\/quotulatiousness.ca\/blog\/2013\/03\/16\/the-cyprus-rescue-includes-nasty-haircut-for-savings-held-in-consumer-banks\/","title":{"rendered":"The Cyprus “rescue” includes nasty haircut for savings held in consumer banks"},"content":{"rendered":"

The BBC reports on the way Cypriot bank accounts<\/a> are being levied as part of the “rescue”:<\/p>\n

Cyprus may be one of the eurozone’s tiniest economies — its third smallest — but for the next 48 hours or so, it may be the single currency area’s most important.<\/p>\n

The point is that there could be serious repercussions for other financially over-stretched economies, such as Spain’s and Italy’s, from the nature of Cyprus’s 10bn-euro (\u00a38.7bn) bailout — which includes, for the first time in any eurozone rescue, losses imposed directly on depositors in banks.<\/p>\n

These losses, running to almost 6bn euros, stem from an emergency levy of 9.9% on bank deposits over 100,000 euros (\u00a386,600) and 6.75% below that.<\/p>\n

The levy serves as a caution to lenders to banks that they should take care where they place their funds and avoid banks which overstretch themselves — as Cypriot banks did.<\/p>\n

But precisely the same arguments — for what is known as a “bail-in” by private-sector creditors — were put by liberal-market purists at the peak of the banking crises in Ireland and Spain.<\/p>\n

In the end, eurozone governments were terrified that if lenders to Spanish and Irish banks were punished, there would be a devastating domino effect of withdrawals of funds from banks in other weaker economies — a domino effect that would jeopardise the survival of the eurozone.<\/p>\n

So, reckless lenders to Spanish and Irish banks were not punished. <\/p><\/blockquote>\n

There’s a strong possibility that savers in other European countries with weakened banking systems to draw the correct conclusion quickly … and start pulling their money out of the banking system. And also expect the EU to react with draconian currency restrictions. It’s a potential banking sauve qui peut<\/em>.<\/p>\n","protected":false},"excerpt":{"rendered":"

The BBC reports on the way Cypriot bank accounts are being levied as part of the “rescue”: Cyprus may be one of the eurozone’s tiniest economies — its third smallest — but for the next 48 hours or so, it may be the single currency area’s most important. The point is that there could be […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[25,62],"tags":[436,893,337,33,335],"class_list":["post-19464","post","type-post","status-publish","format-standard","hentry","category-economics","category-europe","tag-banking","tag-cyprus","tag-eu","tag-ireland","tag-spain"],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p2hpV6-53W","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/19464","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/comments?post=19464"}],"version-history":[{"count":1,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/19464\/revisions"}],"predecessor-version":[{"id":19465,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/19464\/revisions\/19465"}],"wp:attachment":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/media?parent=19464"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/categories?post=19464"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/tags?post=19464"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}