Κύπρος, Κυπριακή Δημοκρατία, Cyprus

What a mess.

And the EU has brought this on itself.

At first, I thought it was just one bad bank. Some small nobody. Then seeing that it was Cyprus wide, thought it some local decision. That the EU had said “You get a bailout, but we want you to come up with some cash” and the locals cooked up this scheme. Digging into it, it looks like the folks on the EU / Brussels side of the table came up with the idea of a “haircut” for bank depositors. Near as I can tell, this fits the usual model of attempting to rope in ever more folks with money from ever further away (as there are large foreign deposits in Cyprus).

What did they do? The EU decided that the depositors in Cyprus banks would have their deposits taken and used as part of the bailout. Not the whole deposit, just a ‘haircut’.

They even structured it such that major depositors, over 100,000 Euros, got hit the worst (at a near 10% rate). Yet that is only about 3% above what the poorest person with just enough to cover next months rent check got clipped.

Why is this a very bad idea? Look at the Great Depression. What was one of THE prime fixes coming out of those bank panics? Bank insurance with an unimpeachable backer. The average citizen could expect to always get 100% of their money back if a bank failed. Only folks who were super-rich would lose money; and then only if the amount in any one bank was too high. (Inflation has since made the effective limit on the insurance lower, but it is still a great deal of money). This was done simply because the average Joe or Jane can not afford to have their money gone, or ‘tied up’, or given a ‘haircut’. The “little guy” has a rent check in the mill and just enough to cover it. Break that trust, the money leaves the bank. (Not to mention the zillion or two checks that will now bounce as the money that was expected to be there is not there. Many poor folks have just enough to cover the bills in the account; the paycheck goes in, checks written, and not much left when they all clear. Chop out 7%, some checks bounce.)

But that will only be the start of the problems.

Any of the folks who got ‘trimmed’ and has ‘auto deposit’ is highly likely to stop it. A physical check from your employer is THEIR obligation (and their future ‘haircut’). It can be posted off to a Dubai or UK bank account for deposit. Anyone with an ATM machine will start removing whatever “left overs” are in their account “for the weekend”. (I know that were I in the EU, and had $1000 in the account as my ‘float’ level, I’d take out $950 “for the mattress”.) Further, folks in other PIIGS countries can expect the same treatment from the EU. Being “not dumb” they will start taking their money out too. “If it can happen there, it can happen here” will be muttered in the streets. Heck, Europeans are much more aware of this kind of thing. (Many a French house had a few gold coins nailed behind a wooden strip of the door jamb as insurance against the banks and governments.)

I would not be surprised at all to see an EU wide run on the banks. (Though I expect it will be mostly limited to the PIIGS).

But it is not going to stop there. If you were a Russian who just had 40,000 Euros lost: Would you send future money to the EU, or to Dubai? IF you were a Chinese company with import funding sitting in a bank that got clipped, will your next round of imports have the payment left in a local EU bank, or immediately moved to a China, Singapore, Hong Kong, or Macau bank? The very large players can easily just shift where their money flows. They will be doing that now. (Look, if you put up 250,000 Euro to buy a load of farm equipment, and found you now needed to wire over another 25,000 as the escrow was now too low, think your next escrow account will be set up there?)

Trust is a very fickle and sensitive thing. Once lost, it may never return. It has now been lost.

I’m sure the Eu Meisters thought Cyprus was small, and folks would not generalize it to the rest of the EU. I’m sure they thought it would “clip” some Russian money and some money laundering from drug runners. But drug runners have long memories and when you short them 10% on the payment, well, “not good” comes to mind. So they will now have some very angry and not very “self limited” folks looking at “who did this” and seeing “EU Meisters” all over it. Blame will attach to the EU, not Cyprus. That’s where the deal was hatched.

So “that money” will likely flee as well. Instantly, new deposits and new accounts will cease. Some accounts will just drain slowly in the normal course of events. Others will be wired out as soon as allowed. CFOs of companies all over the world will be dealing with this. Did they think it would only hit illicit ‘money laundering’? Say a Russian company with a Million Euro outside Russia had it in a Cyprus bank. Had some deal with Samsung to sell phones in various places. So periodically just moved money from the Russian account to the Samsung account in the same bank (making it fast and easy). Think that Samsung CFO will be needing to report a 10% loss on his monthly report? Think he’s not going to require new deals to have a ‘wire transfer to Japan Bank’ even if it might mean more paperwork for crossing national boundaries? Think he’s not going to ask “Might Spain or Italy be next?”.

I can’t say “how big” the drain will be. I can say that the EU has started a run on the banks of the EU. It may be a slow run ( A “walk on the banks”?) but all around the world folks are starting to realize that “You can not trust an EU Bank”. They have set a precedent of “Fleece the Customer”, and the customer can leave. (Or just not show up to begin with). The UK, with its own currency and banking system, will likely do OK. Sweden and Switzerland will gain some. I’d expect some accounts to shift to Dubai / Qatar / that new Arab banking network they are trying to build, and others to go to Turkey and the Caymans. It’s not hard to move one country over. The exit will be largest from the Cyprus banks. As that money is much larger than the locals, the stress on their banking industry will be large. I’d not be surprised to see banks laying off people (after the labor spike needed to do transfers and account closures fades) and perhaps some shutting down all together. I do know that I’d not open an account in an EU bank at this point.

You see, I (and others) will not see this as a “Cyprus Malfeasance” we will see it as an “EU Mandate”.

The “little guy” will see it as theft or fraud or both.

For that matter, looking into it has also shown that the Cyprus banks didn’t really do much wrong. They held a chunk of their assets in “Government Bonds”. Typical mandated ‘safe investment’ practices. “Reserves” requirements. But many of those were “Greek Bonds”. They were forced to take a write down on the value of those Greek bonds, so then were ‘short of capital’. Other than doing what they were told, not much of their responsibility. (Or is the EU saying “Do not buy EU governments bonds!”…) As the French have a load of Greek debt too, one might expect a bit of a run on French banks next week too… There will be computer screens all over the planet looking at “Percent of bonds by country for each bank” in reserves… So is the EU saying that when they are doing a ‘bail out’ of a country and asking that folks support them by buying that country’s bonds, folks instead need to be selling them? They have just hung out a large “Do not carry PIIGS bonds as reserves” sign. So who will buy Greek or Italian bonds if not the banks?

So much mess, with the implications an side effects fanning out over so much of the planet, from such a small place. All because the EU Meisters were stupid in hitting ‘the little guy’ with a ‘haircut’.

Some Links

Cyprus does a lot of business as a money center (some in the EU would say money laundry). Attempting to get some of that money and / or punish the folks of Cyprus for being a laundry will result in a lot less business for companies that set up foreign accounts:

http://www.erteamcorp-services.com/open-a-cyprus-bank-account

Cyprus Banking – Get your Cyprus bank account within 4 days fully activated and working

A bank account in Cyprus is very easy to open, and it does not cost too much money, either in fees or bank costs. Cyprus banking can offer the businessman all the facilities that he may require. In a Cypriot bank account you may deposit as much or as little money that you may need to. There are no limits of maximum or minimum! The costs of running and maintain a Cyprus bank account are minimal, i.e. They run into a few euro per month. The initial bank costs for opening a bank account in Cyprus are the cost of the digipass machine, or token, and some euro for the courier service; usually they range between 70 to 90 euros.
[…]
Cyprus Banking Confidentiality

Your confidentiality is fully guaranteed. No one knows the name and the rest of the personal data of the bank account, but the bank itself. And in Cyprus, the details of the account are not revealed to the tax authorities, or any other authorities, or the government or any third country. The only way a third party such as a third country to get details of a Cyprus bank account, is to get a court order, in the process of investigating a very serious crime.

So in an attempt to cream off some of that “funny money” the EU Commissars are just going to make Panama, Caymans, Switzerland all a bit more happy… They may reduce “such banking” in Cyprus, but at the expense of chasing “such money” out of the EU.

A bunch of related articles:

http://article.wn.com/view/2012/06/04/Cyprus_Popular_Bank_may_trigger_bailout_request/#/related_news

Gives a sense of the “build” over time of this issue. So for folks in Cyprus and other parts of the EMU zone there’s bit a bit of warning that “something was coming”. Many folks, secure in the knowing that “depositors are always safe” will have left their money in the banks. The EU Meisters have now assured folks will, in future, withdraw money from EU banks on the first news of issues developing. They have broken the trust and it will stay broken, so the only rational response is to ‘respond fast, early, and fully’ to any developing financial problem in any EMU nation.

Greek PM, Cyprus leader discuss debt, energy German Chancellor Angela Merkel, second right, speaks with Cypriot President Nicos Anastasiades, center, during a round table meeting at an EU summit in Brussels on Friday, March 15, 2013. Cypriot President Nicos Anastasiades listens to questions from journalists during a media conference at the European Parliament in Brussels on Thursday, March 14, 2013. European Union heads of state and government will meet for a two-day summit, beginning Thursday, to discuss the current financial crisis.

Eurozone pledges to bail out Cyprus The Meaning Of Cyprus New President-elect of the Eurogroup and Dutch Finance Minister Jeroen Dijsselbloem addresses the media after an Eurogroup finance ministers meeting at the EU Council in Brussels on Monday, Jan. 21, 2013.

People queue to use an ATM machine outside of a Laiki Bank branch in Larnaca, Cyprus, Saturday, March 16, 2013. INSIGHT-Numbers game turns nasty for Greek stats chief IMF says Europe’s banking sector still fragile Cyprus has been a member state of the European Union since 2004. Following clashes between the two communities the Turkish Cypriot seats in the House remain vacant since 1965.

Cyprus sees chances of EU bailout increasing
The Boston Globe2012-06-04

Cyprus sees chances of EU bailout increasing
Seattle Post2012-06-04

Cyprus becomes 5th eurozone state to seek bailout
Philadelphia Daily News2012-06-25

Cyprus banks must ringfence Greek risk: central bank head
Chicago Tribune2012-06-28

Cyprus becomes 5th eurozone state to seek bailout
Seattle Post2012-06-25

Cyprus, Troika Agree Bailout Terms, ECB Demetriades Says
Bloomberg2012-11-30

Cyprus sees Greek polls easing bank aid prospects
Deutsche Welle2012-06-19

Now, when ‘bailout’ is in the news “take money from bank” will be what rattles around in folks heads. Again, not just for Cyprus, as this was an EU decision. It is an “EU Thing”.

http://www.dw.de/cyprus-popular-bank-may-trigger-bailout-request/a-15997571-1

Cyprus could become the fourth eurozone country to be asking for a bailout. Its Popular Bank needs a huge sum for recapitalization by the end of June, and Nicosia hasn’t said where it will come from.

The Cyprus Popular Bank as the second biggest lender on the island needs another 1.8 billion euros ($2.23 billion) until July to meet new recapitalization requirements, the director of Cyprus’ central bank, Panicos Demetriades, told the Monday edition of the Financial Times.

It’s highly uncertain whether the government in Nicosia will be able to come up with the money. “The closer we get to the deadline, the bigger is the likelihood of Cyprus having to ask Brussels for help,” Demetriades commented.

Cyprus may thus become the fourth eurozone candidate for an international bailout, following in the footsteps of Greece, Portugal and Ireland, and reflecting Spain’s precarious situation at the moment.

Neighboring Greece part of the problem

Cyprus Popular Bank has been the country’s lender most exposed to toxic Greek debt. The cash-strapped government has said it’s willing to give financial support to the bank, but has so far failed to elaborate on what exactly it can do.

In audited results in April, Popular revised its losses upwards to 3.65 billion euros due to a write-down of Greek sovereign bonds. The economy in Cyprus has been struggling with recession and low domestic demand. Nicosia is expected to announce more austerity measures soon in a bid to keep the public deficit below 2.5 percent this year.

First off, that last line. A public deficit of only 2.5% ? That’s a number the USA can only dream of. We have a 40% deficit. We borrow 40 cents of every dollar the government spends. We are in far worse shape than the government of Cyprus.

Second, their ‘recapitalization’ was not due to bad real estate loans, bad management, poor banking practices, lax laws, etc. It was due to holding Sovereign Debt of an EU country as “reserves” and being forced to take an accounting entry ‘write down’ on their future value. So what will happen to global banks when the $16 Trillion of US Debt in ‘reserves’ requires a ‘write down’? Does anyone really think a country running a $1.6 / year deficit at a 40 % level can find a way to not only get that much more tax revenue, but an added $16 Trillion to pay off those bonds?

Our bonds are, IMHO, not much different from Greek bonds. Only difference is that we can print dollars to pay for the bonds and Greece could not print extra Euros.

It is also interesting that Cyprus got a ‘haircut’ while the other bail out candidates did not. So having now set this precedent, if you have money in a Spanish, Italian, Greek, etc. bank: How safe to you feel? What if there is another ‘bail out request’ needed as more of those Sovereign Bonds drop in value on this news? As folks start selling them to exit Euro denominate assets? As money heads to the Caymans and Switzerland instead?

http://www.reuters.com/article/2012/06/27/us-cyprus-bailout-idUSBRE85Q0OE20120627

From 2012. What was the status then?

Cyprus bank bailout grows on largest bank bid

NICOSIA | Wed Jun 27, 2012 8:11am EDT

(Reuters) – The cost of Cyprus’s EU bailout to support a major bank jumped unexpectedly on Wednesday after the island’s largest lender said it too needed state support to meet a regulatory shortfall in capital by June 30.

The tiny Mediterranean island became the fifth euro zone nation on Monday to seek emergency funding from Europe, with a bailout bill that could potentially amount to more than half the size of its economy.

Cyprus already needs 1.8 billion euros ($2.2 billion) to help recapitalize Popular Bank, its second-largest lender.

Bank of Cyprus followed with a call for aid on Wednesday, saying it would need “temporary capital support” from the state to the tune of about 500 million euros – effectively jacking up the nation’s exposure to its banks to 2.3 billion euros.

Cyprus banks have been crushed by a writedown on Greek sovereign bonds negotiated in an attempt to make Greece’s debt mountain more sustainable. Bank of Cyprus and Popular recorded record losses in 2011, depleting their regulatory capital.

Combined, a 2.3 billion euro figure is a considerable chunk of Cyprus’s 17.3 billion euro economy, and two euro zone sources on Tuesday put a potential bailout amount at up to 10 billion euros.

So “Fixing Greece” has shot Cyprus.

And Greece isn’t really fixed.

http://www.cyprus-mail.com/baolout/incredulity-decision-gives-way-fury/20130316

Some of the comment thread at that bottom of that one enlightens about ‘folks on the ground’ and what is likely to come. At they had a ‘not that old’ article that had an interesting title, but it came up as ‘archived’, I’m going to copy a fair amount of text here.

Incredulity at decision gives way to fury
By Annika Breidthardt and Robin Emmott and Michele Kambas Published on March 16, 2013

THE EUROZONE struck a deal on Saturday to hand Cyprus a bailout worth 10 billion euros but demanded depositors in its banks forfeit some money to stave off bankruptcy despite the risks of a wider run on savings.

The eastern Mediterranean island becomes the fifth country after Greece, Ireland, Portugal and Spain to turn to the euro zone for financial help during the region’s debt crisis.

So blame is landing directly on The EU. And why were Greece, Ireland, Portugal and Spain not “clipped”? Do you have any faith they will not be ‘clipped’ in any future request for more ‘bailout’? Spanish unemployment is not improving. Greece is not improving. I think another round of ‘bailout’ is likely. Would I leave one Euro in a Greek or Spanish bank? (Italy is not yet too bad, and Ireland has recovered quite a bit. Portugal? Not sure.)

In a radical departure from previous aid packages – and one that gave rise to incredulity and anger across the country – euro zone finance ministers forced Cyprus’ savers to pay up to 10 per cent of their deposits to raise almost 6 billion euros.

Almost half of its depositors are believed to be non-resident Russians, but most of those queuing on Saturday at automatic teller machines to pull out cash appeared to be Cypriots.

“I wish I was not the minister to do this,” Cypriot Finance Minister Michael Sarris said after 10 hours of late-night talks in Brussels where the package was hammered out.

“Much more money could have been lost in a bankruptcy of the banking system or indeed of the country,” he said, adding that he hoped a levy and bailout would mark a new start for Cyprus.

Without a rescue, Cyprus would default and threaten to unravel investor confidence in the euro zone that has been fostered by the European Central Bank’s promise last year to do whatever it takes to shore up the currency bloc.

So looks to me like a “Fleece The Russians” motivation for being treated differently. Wonder if anyone in the EU will be needing Russian Gas this winter?… And these loons think at 10% ‘haircut’ will NOT “unravel investor confidence”? Well, maybe they are write. You can’t unravel what has just had a double barrel shotgun blast through it…

The bailout was smaller than initially expected and is mainly needed to recapitalise Cypriot banks that were hit by a sovereign debt restructuring in Greece.

The deposit levy – set at 9.9 per cent on bank deposits exceeding 100,000 euros and at 6.7 per cent on anything below that – will take force on Tuesday after a bank holiday on Monday.

To guard against capital flight, Cyprus will take immediate steps to prevent electronic money transfers over the weekend.

In the coastal town of Larnaca, where irate depositors queued early to withdraw money from cash machines, co-op credit societies that are normally open on Saturdays stayed closed.

“I’m extremely angry. I worked years and years to get it together and now I am losing it on the say-so of the Dutch and the Germans,” said British-Cypriot Andy Georgiou, 54, who returned to Cyprus in mid-2012 with his savings.

“They call Sicily the island of the mafia. It’s not Sicily, it’s Cyprus. This is theft, pure and simple,” said a pensioner.

The levy breaks the taboo of hitting bank depositors with losses. But Dutch Finance Minister Jeroen Dijsselbloem said it would otherwise have been impossible to save Cyprus’ financial sector which, compared with national economic output, is more than twice as big as the EU average.

“As it is a contribution to the financial stability of Cyprus, it seems just to ask for a contribution of all deposit holders,” Dijsselbloem, who chaired the meeting in Brussels, told reporters. “We are not penalising Cyprus…, we are dealing with the problems in Cyprus.”

And the problems in Cyprus are mandatory write downs of Greek debt due to the EU process of running things…

The island’s bailout had repeatedly been delayed amid concerns from other EU states that its close business relations with Russia, and a banking system flush with Russian cash, made it a conduit for money-laundering.

Dijsselbloem said that under the rescue, the island’s debt would fall to 100 per cent of economic output by 2020.

In return for emergency loans, Cyprus agreed to increase its corporate tax rate by 2.5 per centage points to 12.5 per cent. This should boost revenues, limiting the size of the loan needed from the euro zone and keep down public debt.

Cypriot President Nicos Anastasiades called a meeting of party leaders for Saturday night to brief them on the bailout.

International Monetary Fund Managing Director Christine Lagarde, who attended the Brussels meeting, said she backed the deal and would ask the IMF board in Washington to contribute.

“We believe the proposal is sustainable for the Cyprus economy,” she said. “The IMF is considering proposing a contribution to the financing of the package … The exact amount is not yet specified.”

I wish they would stop saying “contribute” when they mean “shake down”… but we see the “spread to other peoples money” in full effect here. Not just Russians, but the IMF (and through it to the USA and Japan and others “contributions” to the IMF.)

Cyprus, with a gross domestic product of barely 0.2 per cent of the bloc’s overall output, applied for financial aid last June. But negotiations bogged down in the complexity of the deal and reluctance of the island’s previous president to sign.

Moscow, which has close relations with Nicosia, is also likely to help by extending a 2.5 billion euro loan by five years to 2021 and reducing the interest rate.

“My understanding is that the Russian government is ready to make a contribution with an extension of the loan and a reduction of the interest rate,” said the EU’s top economic official, Olli Rehn.

Cypriot finance minister Sarris will travel to Moscow for meetings on Monday to try to pin down the new loan terms.

Cyprus originally estimated that it needed about 17 billion euros – almost the size of its entire annual output – to restore its economy to health.

But because a loan of that magnitude would increase its debt to unsustainably high levels and call into question its ability ever to pay it back, policymakers sought to reduce it by finding more revenue sources in Cyprus itself.

The Greek units of Cypriot banks were excluded from the deposit levy, Greek finance minister Yiannis Stournaras said.

And the collateral damage rolls on. But at least folks will be talking to Moscow. I wonder how many “Party Bosses” had money in banks in Cyprus…

Some selected comments:

Wail Fahmi Bedawi · Khartoum, Sudan
Neo-Liberal Policies live on others’ money via austerity programs. Austerity programs never ends borrowing from others (mainly the rest of the world) as unemployment domestically increases. Corruption, Immigration, and capital outflows are the natural response. Ask the African history with such programs that destroyed people’s life all around. Cyprus you are unlucky. You elected the wrong government for the wrong times.

Pete Adams · St Catherines, Almondsbury
Anyone taking bets on the Russians telling Cyprus to ignore their money or no more loans?

Alun Jones · Bourton Vale
The sad thing is that in Cyprus no one plans ahead more than a few seconds! So they steal money from pension funds, now its blatant robbery from bank accounts, so what happens when that money is squandered away to pay for a bloated and corrupt civil service? What are the long term plans to get out of this mess? Or do we just have crisis management from month to month, obviously one cannot trust banks in Cyprus, a run is the next stage in my opinion.

Alan Graham
Can anyone tell me how much cash you can take out the country per person on a plane ?
Im thinking UK then Guernsey.

Nick Bulut ·
You can take out as much as you like but anything over 10.000 has to be declared at customs.

Divadi Bear · Top Commenter
Russians are excellent economists. I expect Cyprus will have to say goodbye to the Russian deposits of ca., 25 billions here when it is removed to another NON EU foreign bank. It could also mean a RUN on other EU banks to remove Russian money from them !!!
Looking to the immediate future, I feel that the EU, IMF and ECB have laid a “Virus” with the demand of tax on all bank deposits, IN IT’S PRESENT FORM, on Cyprus and will lead to a further World Financial Crisis !!!

Andrew Tolley
Financial repression at its finest. I am very sorry for all Cypriots. To all others who think the governments and banks act in your interest get your money out of the banking system now. Do you think they really have your money with the fractional reserve system? This will be part of the solution to the global banking problem and the solution will be theft from anyone who is silly enough to leave their money to these predators and the global banking cartels.

Kypros Kyprianou · London Metropolitan University
Why did Cypriots take a haircut on Greek Loans and then when depositors have to take a haircut Greeks are exempt.

Costas Karseras ·
Not long ago many were calling for the TROIKA to come and put the Cypriots in order. Some of us have no elusion about the nature of TROIKA or the EU and the IMF, they have replaced the oppressive colonial armies. They kill without using arms. The Cypriot people should resists the neo-colonialism, together with the other EU people including the demonized Germans. The German people are also victims of the same neo-liberal policies and are suffering from unemployment and homelessness whilst the 1% elite is increasing “their” wealth which they never earned.

Gabriele Fiebelkorn
Thank you! You’re absolutely right. The first people who got to taste the “German Medicine” were the Germans themselves and every time I read about the “wonderful German economy” it makes me sick because I observe so much poverty in my country. I wish people abroad would understand that German companies are so successful only because they hire and fire their employees and pay them dumping wages (we are one of the few countries without minimum wages). I sincerely hope that people in our countries will not start to hate eachother but put the blame where it belongs: banks and corrupted politicians!!! We are all suffering of the same “Mafia”….

Nick Bulut ·
This is communistic nonsense. While there is poverty everwhere in the world and always will be, Germany does much better than most other countries. Most industries there have collective agreements between workers and employers that stipulate minimum wages. What unions and unreasonable benefits to government employees can do to a country is clearly to see here in Cyprus, the road to bankrupcty.
To call the helping hand that saves a country through contributions by foreign tax payers ‘neo-colonialsm’ can only stem from an unstable mind.

Jonathan Scott · None
Costas, where ever you are from, what ever country you live in if you are an every day common man/woman you get screwed by governments, lawyers, banks etc when the Cypriots start to realise/understand this and stop blaming others things might start to change for the better….

Andy Gross · Pennsylvania State University
Nazi-like confiscation will end badly.

Alexander Stone
Imagine the worst case scenario… the bailout robbery deal doesn’t pass through parliament (either in Cyprus or in Germany)… what happens next? Not a big deal, BUT – Everyone NOW knows that Cyprus has been raided… psi involvement, haircut, just name it….. then whats next? Definitely run on the banks… then what? Who is safe anymore? The bank deposits are the Holy Grail… the safest place….

Jonathan Scott · None
Alexander, this will start happening through out the EU now, Cyprus just happens to be the first country where it has taken place that’s all …

James MacArthur · Web Developer at Llandric
How daft are they? In this ‘move’ to save the country they have destroyed it. Banks will shortly have no cash left after the Tuesday run on the bank which is now inevitable. They will have to print more notes which will lead to massive inflation. No business will now invest in the island, property will not sell, goods will not sell, poverty and strife will amass. And all so the corrupt government of the last 20 years got to line their pockets. Cyprus its time to WAKE UP! Start dealig properly with your problems, 1st one is deal with your daft government, your daft banks and their prehistoric and illegal borrowing and lending habits, then you can tackle the remainder of things which are now plaguing your country.
This is the first time since I came back to the UK that I am actually glad Im no longer in Cyprus. And I truly loved it there.

Graeme Smith
Next will be Spain, Ireland, Greece and Portugal !!

Kevin Alejandro Diamante · Callcenter agent at Becogent
your forgetting one point, THEY can’t turn on the printing presses only the ECB can. the sad thing would be a bank run as there is no where the money could go unless Cypriots decide to put there money in any country thats not in the Euro and start saving in non euro countries. The Trokia have shot themselves in the foot, this is supposed to stop bankruptcy and save the euro, I see it possibly doing the opposite. Tuesday if a ban run happens in Cyprus on the right scale then the banking system there will go into failure and as soon as this happens anywhere in the eurozone then as the eurozone is one banking system when one part fails the rest fails as the eurozone will have a bank run that will spread like wildfire.

On a positive note if the euro was to fail it would almost definitely be a good thing in the long run. As every country would only get back on there feet once National Central banks take back full control from the ECB and back to the good old days where ” the buck stopped at someones feet”. If the euro does collapse then it will serve as a reminder that currency is something that is sovereign to the nation it serves and that only a sovereign can control the stability of their countries currency, for this a currency can not be shared.

I feel sorry for anyone in a eurozone country as they never voted for it. the people to blame is there former political leaders who robbed them.

Sally Ann Lewis · Paignton Secretarial College
Have just tried to transfer some money between my deposit account to my current account and they have even blocked that, so now have 20 euros to live on till they decide to go back to work!

Alessandro Morelli · Top Commenter
tueasday bank will be closed. bankers too afraid. Lets all meet, hammers, dinamite and take money from atm machines or from saferooms in banks. This shitty small piece of floating land is going to be killed!!!!

Wendy Van Kuijk · Larnaca, Cyprus
Yes!!!!!

Divadi Bear ·
Alessandro Morelli:Watch out !! You are Inciting Criminal Offences !
Many feels the same way as you, but it is the EU, ECB and IMF you should be blaming not Cyprus. Cyprus has been subjected to BLACKMAIL !! NO haircut, then NO bail out !!

Iain Macarthur · Royal Military Academy Sandhurst
Don’t they see the knock on effect. First everyone withdraws whatever they have left so the Cyprus banks have no capital, so they cannot function. Secondly, now the principle is established every other euro bank account can be hit the same way, in every other country. So everyone withdraws all their money and the european banking system has no money left to play with and the whole rotten system collapses. This was demanded by the so called experts!!

Simon Andrew MacArthur · Brooklyn, New York
Brother – the banks brought this on themselves – when we see the banks like HSBC, laundering billions in drug money and walking away with a slap on the wrist my blood just boils – I want to see some banks CEO strung up by his balls in Times Square – then something might change.

Kypros Kyprianou · Top Commenter · London Metropolitan University
You cannot afford to take your money to another Eurozone country Spain and Italy are definitely not safe. Dubai may be the only option

Frank Brown · Top Commenter
Thou shalt not steal, is one of the Ten Commandments and Nicos Anastasiades stole 6 billion Euros from the people. No doubt he will spend quality time in hell when he gets there, it’s not a matter of if, it’s a matter of when.

Johnny Karsas
I think the russians will probably “take care” of him

Frank Brown · Top Commenter
hmmm… I suppose it’s a possibility
Reply ·
· 16 hours ago
Wendy Van Kuijk · Larnaca, Cyprus
He already is in Hell …. :-)

Strahinja Mladenovic · Hotelschool The Hague
The people have finally awoken and I’m sure every subsequent government move will be well scrutinized and questioned. Its down to everybody concerned to educate themselves on the issue and object to future taxation measures. You are the only one who can help yourself and those around you because no authority has your best interests in mind.

Cypriot politicians, they are helpless, controlled by outside powers and only have their own interests in mind. A bailout WAS on Anastasiades’ manifesto so I don’t see why everyone is so surprised. The man is a globalist pure and simple, he believes in a globalist model of Cyprus, so we should all expect further conformism to EU legislation/standards. Whether this is a good or bad thing depends on your personal opinions/circumstances.

The EU, they are only interested in “making an example” of us. A grim warning to other EU states as to what will happen to them if their financial sectors get too greedy with foreign investment. Indeed it may also be a small-scale socio-economic experiment to see how we react to these policies before they are used on larger economies.

Turnkey Casino
I think the situation is different. How you would explain a Dutch, French or German tax-payer that their money is used to bail-out a country which has produced a financial mess. Politicians in many EU countries do not have so much room. Nobody in these countries understands why they have to pay for incompetent bankers and politicians in Cyprus. The current agreement is fair. A 10% hair-cut is nothing compared with what will happen if Cyprus can’t pay the due loans (bonds) in May.

Strahinja Mladenovic · Hotelschool The Hague
The word “fair” should be used loosely. This this was a well devised plan to secure the first 6 billion quickly and without the risk of mass exit. We knew there would be a bailout but we didn’t know that it would happen this way. Anastasiades had no choice but to accept these terms or risk losing favour among his EU colleagues. This is a lose-lose situation, a new paradigm for financial terrorism. I appreciate the point of view of the Dutch, Germans etc…but this punishment is way too severe, not to mention needless and proves that Brussels isn’t interested in the well-being of its citizens or alleviating the recession.

James MacArthur · Web Developer at Llandric
a new paradigm for financial terrorism

Fantastic phrase.I’m so stealing that

Katharine Zachariadou · Works at Happy house wife/mom
It is absolutely appalling that money will be STOLEN from savers who were in no way responsible for the country’s problems. What incentive does this give for anybody to save in any EU country? How on earth can this be consdered acceptable???

Annemieke Lommaert-Blondeel
You actually were responsible: you voted these nitwits into power….

Turnkey Casino
Cypriots elected their politicians and they did not control their managers. Therefore Cypriots are responsible for what happened. The mentality that Cypriots do not feel responsible for the mess is exactly the mind-setting which has caused the mess.

James Sinclair · Went to one
I never voted for him as I am not allowed to vote in Presidential elections in Cyprus, So what right does he have to make me pay for Cypriots who abused and stole from their own people.

My money was earned abroad and brought into this country having been taxed in UK and I intend to get my money out of this country before this fool apologies for another theft.

He has killed the golden goose having had conversations today with expats, and they had once common thread – they are stopping all pensions and foreign currency coming into the country immediately. so another source of bank liquidity will dry up.

This so beautiful island is now so toxic it is untouchable, untrustworthy and now insignificant.

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Shahzad Zafar · Works at Pharmacal company cyprus
its better to leave cyprus bcoz now they dont like foreigner and now new thing on people

Nick Athinodorou · London, United Kingdom
And go where exactly?

Frank Brown ·
When the oil and gas start to generate billions in a few years time, would the Cyprus government return the money they robbed from us? Obviously NOT !!!

Moyra Blackie ·
Frank:If and when gas or oil is found, it is already under the eye of the US.

James MacArthur · Web Developer at Llandric
Only have to look at the electricity bills which they inflated to cover the explosion and still have not dropped the price.

Simone Castronovo · Titolare at Studio Tributario castronovo
Cyprus is finish … it is no credible, nobody will invest in a country that in crisis time bring the [m]oney in the deposit and increase the corporate Tax! …….. Cyprus could be a “Switzerland in the Mediterranean”

Frank Brown ·
Nick Anastasiades robbed the people so lets hope he gets a place in hell when his time is up.

Michelle Higgins
He said the second choice was the controlled management of the crisis, through the decisions taken and which can be summarized as follows:
1. Ensuring the liquidity of the banks and the rescue of the banking system through their recapitalization.
2. Rescuing 8.000 jobs in the banking sector and thousands of others which would be lost as a corollary of not maintaining the operations of banks.
3. Total rescuing of deposits, with just the exchange of a small percentage of savings with shares of the two banks. Currently, these shares do not have their full value, but with the economic recovery they will repay most it not all of the amount that will be cut.
4. This option results in a drastic reduction of public debt, makes it manageable and sustainable and relieves future generations from the burden of repayment.
5. It saves provident and pension funds and avoids taking other tough measures such as wage and pension cuts that were put on the negotiations table.
6. It avoids further recession and the risk of the vicious circle of a second memorandum.
“We are not aiming to gloss over the situation. The solution chosen may be painful, but it was the only one that would allow us to continue our lives without adventures. It’s a decision that leads to the historic and permanent rescue our economy.” he said..

James Sinclair · Top Commenter · Went to one
Michelle – You have fallen for the political spin from a class of people worldwide who feel so self important that they show nothing but contempt and disrespect for ordinary people by asking us to believe:

“We are not aiming to gloss over the situation. The solution chosen may be painful, but it was the only one that would allow us to continue our lives without adventures. It’s a decision that leads to the historic and permanent rescue our economy.”

The measures he has brought in is what they tell you what not to do when reading Economics 101. To basically address each of you points.
1. Come Tuesday those who were not forewarned about the haircut will cause a run on the banks as they seek to secure.withdraw savings. Those who were forewarned will never bring the capital back to the island. If the Central Bank puts moratorium on withdrawals investor trust is eroded ever further.
2. It will in effect cause more unemployment. People will send their money offshore, and as many expats are doing in stopping pensions from other EU countries being sent here. With an increase in Capital Gains Tax to 12.5% hedge fund managers will move to countries like Malta and Latvia which offer better returns hence a reduction in the numbers employed in the financial sectors in Cyprus. I will not go on about how this filters through the economy to local business level and its effect on involuntary unemployment and increase in government social spending with reduced tax revenues.
3. Shares in banks are not a sound investment given that the reputations of Cypriot banks are in tatters. With investors protesting outside the Presidential Palace about bad advice given by banks to investors who lost all whilst bankers gained bonuses. Do you expect people to believe the bank and the government will honour its future obligations given this arbitrary act.
4 and 5. So would an increase in Income Tax and public servants contributing to their pension fund and paying for medical treatment like the rest of us. The issue of title deed which would bring in near 2Bn Euros. Income could also be increased if they actually implemented court judgements and collected fines, and operate a Tax Office that actually collects tax.
6. There is a risk of further recession because investment in property is all but dead, the large public service is non-productive – it is a huge drain on the country’s assets. This is a country with a credit rating which is appalling and a strategic fiscal policy based on the hope they have found gas and hope they can keep it. Who in their right mind will ever invest in the infrastructure needed in a country that is in fact one toxic asset.

And Nick The Mail on Sunday (UK) is already on the case don’t think it will make pleasant reading for many in Nicosia.

Divadi Bear · Top Commenter
I have just had a chat with a banker friend in Switzerland: Before I go on, I DO NOT have a Swiss bank account !
OK. it is forbidden for any government of an EU country to deny anyone of removing/withdrawing their money or the government simply taking any amount from your bank account ! The governmet must first pass Legislation setting the maximum amount of money one can withdraw or transfer. The UK did this in the 1960’s !!!
BUT, a very BIG BUT ! If the CY government agree to a haircut with a third party, (the EU,ECB,IMF), on the people’s bank account, as a condition BEFORE a Bail-Out can be paid ??? Then……….? I would like to know though if:
1) Will a normal Giro account with banks be affected ?
2) Is there a “Bottom Line”, (Minimum Amount), before any cuts can be made on any and every money one has in the bank, be it Giro, Savings Accounts, Bonds etc ?
Too few details have been given on this “haircut”.

Dan Tsirikos ·
It has been confirmed, it affects everything from 1 euro upwards in every type of account!

Divadi Bear ·
Dan: In the between time I have learned that the parliments of the other EU countries must vote to agree or dis-agree on this. I don’t think they will agree for fear of the same thing happening to them !!!!!!!

Buisimyok Buisimyok
It looks as if the North part of the island is doing much better ?

Nick Bulut · Top Commenter
Why would that be ridiculous when it’s true?

Nick Bulut · Top Commenter
Simon Taylor , it seems directed at the leadership that is at fault not the victims.

Kypros Kyprianou · Top Commenter · London Metropolitan University
Yes, We should be seeing an influx of Turkish Cypriots buying Cheap land and property in the south, The supermarkets will be full of TC’s buying cheap food and the Hotels filling up with TC’s . GC’s will not be able to afford to go shopping or gambling in the North.
There should also be an influx of GC’s going to north to find work.

John Ozelton · Senior Piping Engineer at International Bechtel
I will be withdrawing most of my money on Tuesday leaving just enough to cover my standing orders and instructing my employer to withold any payments to myself until further notice. Robbin’ Bar-stewards.

John Ogilvie · Ad Dawha, Ad Dawḩah, Qatar
Surely this applies to deposit accounts and not current accounts?

Divadi Bear · Top Commenter
John: VERY wise ! I did this when the Pseudo Soviet president was elected and his commie twits took on the governing of Cyprus !!!

Pauline Read ·
Any Bank or indeed any country who thinks it is okay to dip into my savings I have entrusted them with would certainly no longer have one cent of money left with them. They got into this mess and they think it is okay to steal from their depositors to get them out of it. A big vote of NO CONFIDENCE from me.. It is a form of stealing by stealth. I bet those who got their money out in time are very relieved. Is this a violation of Human Rights? In God you can trust, ROC banks, no way.
Are you really so surprised, look what they did to propety purchasers.

Michelle Higgins
When is the protest march?

Frank Brown ·
I hope there is one.

Nick Athinodorou · · London, United Kingdom
Arrange one..

Yvette Graham · Larnaca, Cyprus
Well as long as the Greek units are excluded, that’s ok then! Seeing as exposure to their debt got our banks into this mess in the first place!!

Anna Shakalis · Parrs Wood High School
Just read about that Yvette!! now we know where all the rich people here have there dosh!!

Plazan Skin Care ·
I will be into the bank on tuesday morning to remove all my money , even if they have already taken the levy , I dont trust them anymore ..

Robert Beeks · · Clemson University
I will do the same.

Chris P Bacon
I think thats the best thing to do! its a absolute disgrace of them to do this! investors will not invest over there then people will start keeping money at home so the banks will run out of money and maybe Cyprus will in the end go under? Good luck! i wish you well.

Yvette Graham · Larnaca, Cyprus
Do you seriously think they’ll let you withdraw your cash? I suspect harsh limits will be imposed.

Christakis Tryfonos ·
‘call me Nik’ said “NO DEAL EVER” on individual Bank deposits…
another great read-my-lips moment by a career politician…!

Divadi Bear · Top Commenter
Christakis, Political Blackmail by the Troika !! They probably had Nice Nik by the short-and-culries: ie: NO haircut, then NO Bail-Out !!!

All in all it looks like about an even mix of “Blame Cypriots” and “Blame EU”. Or maybe it’s just “Blame them all”.

In fractional reserve banking systems, about 1/10 to 1/20 of the “money” exists. If even 10% of the people say “give me my money”, it locks up. Looks to me like more than 10% are going to ask for their money.

This was just so stupid.

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