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Cyprus Deal Reached: 40% seizure on accounts over 100,000 Euros

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SYDNEY (MarketWatch) — Cyprus reached a deal early Monday that would enable it to receive funds from its European and international lenders to prop up its ailing banking sector and prevent its exit from the euro zone, reports said.

The cash-strapped island nation agreed a deal with the European Central Bank (ECB), the European Commission and the International Monetary Fund — collectively known as the Troika — to secure 10 billion euros ($13 billion) of aid, the reports said, citing European Union officials.

Reuters reported that the proposed agreement would include the closure of the country’s second-largest lender, Popular Bank of Cyprus or “Laiki Bank,” with deposits under €100,000 to be shifted to the larger Bank of Cyprus. Deposits over €100,000 at Laiki would be frozen and used to pay off debts, it said.

Separately, Agence France-Presse reported that, as part of the agreement, the country will impose a 40% haircut on Bank of Cyprus depositors holding more than 100,000 euros in their accounts.

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This Should Invalidate The Euro as a Currency

Does anyone need another reason to seek alternative currencies?

Am I missing something?

If foreign investors know that their money can be confiscated, why would they risk putting it in a bank in Cyprus? Won't this kill foreign investment in Cyprus and job creation as well?

And if the EU can do this to Cyprus, can't they do this to any EU country?

What am I missing?

Haircut? More like labotomy!

Haircut? More like labotomy!

So how many cypriots

Have over 100 K Euros in these banks ?

I've heard there are lots of Rich Russians and other eastern europeans with large accounts in these banks.

More to this than meets the eye.

http://www.ibtimes.com/stealing-stolen-money-russia-miffed-o...

http://www.theatlantic.com/international/archive/2013/03/cyp...

Is $100+K in savings

Is $100+K in savings considered "rich"?

I wouldn't say Rich

But I would think it is the top 10%, and there are not many cypriots.

Anyway, the "Rich Russians ' in the article have multiple or much bigger accounts than 100 k

Garan's picture

Retro-active Slavery

I wonder if these people realize that much of the money represents a chunk of their time on this earth. Unwillingly taken in the service of others.

Yep, I cant help but equate

Yep, I cant help but equate my money to the time I spent making it. Get this idea in peoples heads, and it will probably sit even worse than it currently does.

To climb the mountain, you must believe you can.

wow ridiculous

Civil unrest meet Cyprus. 40% off anything over 100k that's insane. Pure theft.

Homeland security statement: patriotism is now considered terrorism.
I love www.isidewith.com shared it with everyone I know. If anything they realize its not just a red and blue idiot running for reelection.

The "unionists" are showing their true colors

direct theft outside of taxation using govt actors, if this ever comes to America congress will wish they had said no to torture, atleast this will help us clarify America's stance on torture if congress tries to pull this here.

America is already fed up.

If you think being an Iranian scientist is scary today, try being an Israhelli monetary scientist the minute Israhell tries to bank run around America...

or we will blame it all on congress while letting the executive reform our democracy into a totalitarian state run by the commerce power of the U.N. and world banking system.

one or the other

A true flower can not blossom without sunlight and a true man can not live without love.

WOW...so if you have 129k dollars

you lose 51K tomorrow?(40%) and if you have 128k then you're ok?

wooow...

No, the 100K is not touched,

No, the first 100K euro is not touched, every Euro above the 100k is taxed at 40%. Still sucks azz!

I think that this...

I think that this will end the concept that it is a good idea to put your money in the bank. Money will be kept any place that it can be hidden. I would only keep the absolute bare minimum in the bank to pay bills and buy gold or silver and hide it. At least if thieves were trying to take it I could protect myself better than I could if the government steals it out of my account. And yes I am aware that the government is doing the very same thing with inflation and money printing.

RickStone

World's first bitcoin ATM: Cyprus

http://www.dailypaul.com/279526/worlds-first-bitcoin-atm-is-...

"We’ve moved beyond the Mises textbook. We’re running in the open market." - Erik Voorhees

Cyril's picture

For thousands of years, banking used to be only about mere usury

For thousands of years, banking used to be only about mere usury and/or greed, through lending and money changing (with or without temples around).

In this new era (200 or so years) of modern CENTRAL banking we've been taken to next stage, lucky folks we are :

GLOBAL PLUNDER through optimized PLANNING and COUNTERFEIT.

And oh so thoroughly "optimized", indeed, isn't it?

http://research.stlouisfed.org/fred2/series/BASE

http://dotxml.brinkster.net/2012/Misc/G4_Charts.pdf

The gauntlet has been thrown down before natural capitalism, right after slapping the latter in the face.

In OUR face, and our families'.

"Bear."

"Cyril" pronounced "see real". I code stuff.

http://Laissez-Faire.Me/Liberty

"To study and not think is a waste. To think and not study is dangerous." -- Confucius

lol, a deal. "We've reached a

lol, a deal. "We've reached a deal with you guys. We've decided to screw you."

Well as long as it was a deal, everything is ok!

SteveMT's picture

People are plowing into Bitcoin, rather than metals. Why?

Why not gold and silver at bargain prices?
BitCoin Mania Accelerates
3-25-13

While Friday's 'hope' triggered some selling pressure in Bitcoin (in EUR), it appears the dismal reality of Europe's new normal has spurred a 'great rotation' as BTC just hit EUR60 for the first time ever...(from EUR36 before the initial Cyprus news last week).
http://www.zerohedge.com/news/2013-03-25/bitcoin-mania-accel...

beacause its new..

People are just now starting to comprehend this technology.

I agree with you. Precious metals is where its at. Bitcoins should still be part of one's diversification. It's okay if you don't like bitcoins.

Almost ALL of bitcoiners are also gold bugs.

"We’ve moved beyond the Mises textbook. We’re running in the open market." - Erik Voorhees

The whole point is to

The whole point is to diversify away from the dollar to keep the money grabbers at bay.

tasmlab's picture

I wonder if the nominal point is significant

Usually the rich are the ones that can skate through these things, and are a pretty dumb target if you hope their money will continue to stay in the country after this crisis is over. Probably good for popular votes.

100,000 Euros would be a lot of cash. An investment advisor would typically advise a wealthy client to keep 5-10% of their holdings in cash, so even a lot of millionaires might not make the clip. They might of did the math and have seen that they are screwing over a couple of people, yet get to make a lot of threats and noise to the joy of the middle-class.

That may be a good strategy - make the first jab a phony one to the very wealthy, and then when they have to go down-market to get the real loot for an inevitable phase II, the population will have already been satisfied that the rich were properly soaked first.

Unless they are liquidating bonds and stocks too.

Currently consuming: Morehouse's "Better off free", FDR; Wii U; NEP Football

$128,000 US Dollars

It is the most "in your face" action ever taken in the history of the world. They used to rummage & pillage, when one country would invade and take over another country, but now they are perpetrating a complete FRAUD against their own people.

Who's next? And, why isn't GOLD going UP? Wall Street reeks of manipulators.

tasmlab's picture

An upside: it is so brazen

If there is an upside to this is that it is so brazen.

Nobody notices QE, or inflation or gradual taxation over time. People might get scared if they just take 40% of your money and hand it over to bankers.

Not to be a dick, but let's hope it's other countries that are made to be the scary, brazen example!

Currently consuming: Morehouse's "Better off free", FDR; Wii U; NEP Football

Garan's picture

Unfortunately. Probably.

Unfortunately, with reactionary people, things probably have to get worse before they get better.

Don't feel guilty for enjoying the show. Maybe things will get better now.

Haircut?!?

I am astounded at how many sources and analysts keep calling this a haircut. A haircut is what you do to an investment. If I am dumb enough to give the government some of my money to buy a bond and they can't pay me back in full, they might make me take a haircut on my investment.

This is no haircut, it's a government seizure of people's savings! Nobody put money in those banks as an investment. They did it in trust that their savings would be safe and they just got burglar'd!

The guillotine removed far less than 40%

but I doubt it was often referred to as a haircut.

Garan's picture

They stopped doing that.

The heads didn't yield enough at the money exchange.

Good point

.

So depositors are now investors? Have to read the fine print when opening a bank account? lol

...why not get a share of the profits when the banks make money :)

donvino

Garan's picture

That would be interest, err.. USED TO BE interest.

Now, with interest < inflation, there is no gain. ..for you.

I guess bank's deriving profit from fractional reserves creates a situation where the 'investors' make less than squat.

I keep so little money in the bank that it seems they are continually trying to apply fees and penalties.

Not a happy customer.

Coming soon to a state near

Coming soon to a state near you! Prepare now.

"It is difficult to free fools from the chains they revere".
--Voltaire

It's hard not to be a menace to society when half the population is happy on their knees. - unknown

wow

Banks>Russians

donvino