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article imageBrussels enforces bailout levy on Cypriot bank deposits

By Katerina Nikolas     Mar 16, 2013 in World
Cypriot depositors queued to withdraw cash from the nation's ATMs as it was announced that an unprecedented tax levy will be applied to all bank deposits from Tuesday. ATMs have now run out of money. Bank runs are anticipated when the banks re-open.
Cyprus President Nicos Anastasiades announced a bailout agreed with EU officials and the IMF will involve a tax levy imposed on all deposits in Cypriot banks. People with less than €100,000 in their accounts will lose 6.75 percent: those with more than €100,000 will lose 9.9 percent. The tax levy is expected to raise €5.8 billion.
Anastasiades said Cyprus had no option but to accept the terms of the bailout deal or the banking system would have collapsed, leading to disorderly bankruptcy. NFP reported the president said the levy will avoid a banking collapse, and help to avoid deeper pay cuts and tax hikes.
According to Euro News, German Chancellor Angela Merkel favoured the levy. She said: “So we said: people who have their money in Cyprus’ banks have to contribute to saving Cyprus...In so doing, the people responsible will contribute – not only tax payers from other countries. And that is correct in my opinion."
The BBC reported that although the levy will not take place until Tuesday when the banks re-open after Monday's holiday, "action is being taken to control electronic money transfers over the weekend."
The word from the Slog is "Cyprus’s own finance minister dismissed the idea of a depositor haircut only a few days ago saying 'Really and categorically – and this doesn’t only apply in the case of Cyprus but for the world over and the euro zone – there really couldn’t be a more stupid idea.'"
The levy will not only affect Cypriots. Many Greek people, fearing a Grexit, transferred funds to banks in Cyprus.
More about Cypriot bank deposits, Cypus bail out, Angela merkel, President Nicos Anastasiades
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