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article imageOp-Ed: Government-sanctioned bank looting coming to a country near you

By Katerina Nikolas     Mar 26, 2013 in Business
It appears that the looting of Cypriot bank accounts could set a precedent for government sanctioned theft to become a popular pastime. Savers and current account holders are now bank investors rather than customers, their accounts ripe for plunder.
There is a logical reason for bank customers to pop their spare savings into bank savings accounts. It is supposedly safer than squirreling cash under the mattress, is supposedly covered by government backed insurance schemes up to $100,000, €100,000, or £85,000, dependant on country of choice, and could possibly offer a small return in the form of interest to bolster the principal.
After the disgraceful shenanigans in Cyprus savers now have every reason to lose confidence in the banking system. Insured account holders faced the prospect of having their insured funds plundered by government theft disguised as a tax, until the Cypriot parliament stood up and defied German diktats which Wolfgang Schäuble promptly tried to deny were German in origin. However he is now very satisfied that Cypriot bank accounts are about to be raided with an estimated 30 percent haircut. The idea of raiding deposit accounts has gained ground, making the prospect of hiding cash in garden holes and biscuit tins as viable an option as banks.
Jeroen Dijsselblom, Dutch Finance Minister who heads up the Eurogroups finance chiefs, suggested Cyprus can be used as a template for future bailouts in other countries. He said "If there is a risk in a bank, our first question should be 'Okay, what are you in the bank going to do about that? What can you do to recapitalise yourself?'. If the bank can't do it, then we'll talk to the shareholders and the bondholders, we'll ask them to contribute in recapitalising the bank, and if necessary the uninsured deposit holders" Reuters reported.
He is not alone in promoting this view. John Ward reported in the Slog: "Joerg Kraemer, chief economist of the German Commerzbank, has enlarged on this mendacity, and called for private savings accounts in Italy to be levied at 15%. 'A tax rate of 15 percent on financial assets would probably be enough to push the Italian government debt to below the critical level of 100 percent of gross domestic product,' he told Handelsblatt yesterday."
And in the U.S. Federal Reserve Chairman Ben Bernanke refused to rule out a Cypriot style bank deposit levy on savers.
Spain's Treasury Minister Cristóbal Montoro announced a new deposit tax levy of between 0.1 per cent and 0.2 per will come into effect shortly and is expected to raise €1.5 billion to €3 billion. The Spanish tax will apply to accounts supposedly protected by EU wide insurance guarantees on amounts below €100,000.
With Cypriot banks remaining closed until Thursday it is impossible to gauge the amount of cash which is due to depart the remaining sound Cypriot banks later this week. A clear message has been sent though that those who opt to leave their funds in banks can expect them to be raided.
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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