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article imageOp-Ed: Cyprus bank depositor tax could lead to run on Europe banks

By Katerina Nikolas     Mar 17, 2013 in World
Ordinary people with bank accounts in Cyprus have been well and truly screwed by eurozone officials who raided their savings with a one off solidarity tax levy. The fall out could be a run on European banks.
People across Europe can hardly be expected to trust a word that comes out of the mouths of their political masters after the unprecedented bailout levy enforced on Cypriot bank deposits.
European Union Economic and Monetary Commissioner Olli Rehn has stated the Cypriot levy is a one off and won't be applied in other cash strapped Mediterranean countries. His words are as believable as those of the new Finance Minister of Cyprus, Michael Sarris, who on Friday dismissed the very possibility of a depositor levy, 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."
Rehn's words are also contradicted by Jeroen Dijsselbloem, the president of the group of euro area ministers, who declined to rule out taxes on depositors in countries beyond Cyprus. The New York Times reported Dijsselbloem said such a measure was not being considered, but his words hardly spark confidence after the stealth operation in Cyprus.
No distinction was drawn between the bank accounts of supposed Russian money launderers and ordinary citizens in Cyprus with accounts containing less than €100,000. Britons, not even part of the eurozone, have an estimated €2 billion in Cyriot accounts. As Forbes pointed out, these depositors were under the "impression they were protected by a deposit guarantee scheme." Now they find their accounts raided and 6.75 percent of their cash deposits stolen in a hastily dreamt up tax. It will be little consolation to receive bank shares in compensation, particularly if deposits were needed to finance standing orders and mortgage payments.
Those with bank accounts in other Euro nations with troika intervention are no doubt queuing at ATMs across Europe to withdraw funds. Account holders in Cyprus and Greece must wait until Tuesday to visit their banks, due to the holiday weekend. There has always been speculation that in the event of a Grexit the powers that be would act over a holiday weekend. Europeans who have continually been lied to by politicians promising no new taxes are likely to be extremely nervous this weekend. Monday could see the start of a bank run which could signal the end of the euro.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of
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