Published on Friday, March 22, 2013 by Common Dreams

If these worries become really serious, . . . [s]mall savers will take their money out of banks and resort to household safes and a shotgun. – Martin Hutchinsonon the attempted EU raid on deposits in Cyprus banks

The deposit confiscation scheme has long been in the making.  US depositors could be next . . . .(Photo: Filip Singer/European Pressphoto Agency)

On Tuesday, March 19, the national legislature of Cyprus overwhelmingly rejected a proposed levy on bank deposits as a condition for a European bailout.  Reuters called it “a stunning setback for the 17-nation currency bloc,” but it was a stunning victory for democracy. As Reuters quoted one 65-year-old pensioner, “The voice of the people was heard.”

The EU had warned that it would withhold €10 billion in bailout loans, and the European Central Bank (ECB) had threatened to end emergency lending assistance for distressed Cypriot banks, unless depositors – including small savers – shared the cost of the rescue. In the deal rejected by the legislature, a one-time levy on depositors would be required in return for a bailout of the banking system. Deposits below €100,000 would be subject to a 6.75% levy or “haircut”, while those over €100,000 would have been subject to a 9.99% “fine.”

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