With 36 NO the parliament of Cyprus turned down, a few minutes ago, the plan of the Troika geniuses that paralyzed European Union...
By HUGO DIXON, REUTERS
Cyprus’s proposed deposit grab is a bad precedent. Money had to be found to prevent its financial system from collapsing. But imposing a 6.75 percent tax on insured deposits is a type of legalized robbery. Cyprus should instead impose a bigger tax of on uninsured deposits and not touch small savers.
Confiscating savers’ money will knock confidence in the banks. Trust in the government will also take a hit, since Nicosia had theoretically guaranteed all deposits to a level of €100,000, or about $130,000. Small savers should be encouraged, not penalized. Those who squirrel away their savings are the quiet heroes of the financial system, not those who drag it down by engaging in borrowing binges.
Nicosia has not technically broken its promise to guarantee small deposits (...)