Cyprus surprise - Cypriot depositors to take a 'haircut'

Graham_Devon

Even after the bailout and promises that all but the two largest banks would be open tomorrow, ministers have renegaded on their promises again, and now all banks will remain closed until at least Thursday.

socrates

Quote:
Originally Posted by socrates
Is it not possible that the idea was put out there to see the reaction to 'bail ins per say' - so it could be repeated elsewhere at a later date - Cyprus is a very good guinea pig

Generali wrote: »

It's possible but unlikely IMHO. The German election is coming up and the Govt didn't want to give 'German' money to money launderers.

In 2007, 3rd party money laundering wasn't a crime! No idea whether it is today but it shows how lax the rules are. Cyprus is generally considered to be a high risk country for AML rules, that is if you do business with a Cypriot entity you must assume that there is a high risk that it is for the purpose of laundering money.

Cyprus to shape future euro bank rescues: Eurogroup head



http://www.reuters.com/article/2013/03/25/us-eurogroup-cyprus-dijsselbloem-idUSBRE92O10A20130325

Masomnia

Question. Are capital controls actually legal in a single market?

socrates

Masomnia wrote: »

Question. Are capital controls actually legal in a single market?

In case you had not realised - they are making it up as they go along - cutting the cloth to fit

Its all a test case - for future similar bail ins

Fella

socrates wrote: »

In case you had not realised - they are making it up as they go along - cutting the cloth to fit

Its all a test case - for future similar bail ins

Yes. Quite how this WON'T cause a run on every PIIGS bank (for starters) is hard to imagine. You'd have to be crazy to leave more than 100k in any of them.

armour

Fella wrote: »

Yes. Quite how this WON'T cause a run on every PIIGS bank (for starters) is hard to imagine. You'd have to be crazy to leave more than 100k in any of them.

.....So, where's the money gonna go?

HAMISH_MCTAVISH

armour wrote: »

.....So, where's the money gonna go?

London, Zurich, Berlin.

mcfisco

armour wrote: »

.....So, where's the money gonna go?

New York, Paris, Peckham

ERICS_MUM

armour wrote: »

.....So, where's the money gonna go?

1. If they want to switch out of Euro, the mighty US Dollar is traditionally the currency of refuge in troubled times

2. If they want to keep their money in Euro but out of Eurozone countries/banks, London has a sizeable and flourishing Euro market

3. The more "sophisticated" might invest in gold

The_Green_Man_2

CLAPTON wrote: »

Maybe the point is being lost in the detail.

The issue I was trying to make was about the consequences of letting banks fail even when protecting the 'little' person using the FSCS guarantee.
If truly a bank is allowed to fail, that would lead to decent businesses being unable to access their own money and lead to their bankruptcy. The consequences in lost business, unemployment, failed mortgage payments etc might be much more than ordinary people losing their savings.

Unfortunately you haven't been able to provide details of what the impact would be, so it's difficult to compare the impact on a few businesses of having their bank go under, to the impact we are seeing where every tax payer is underwriting the bank.

If you read the FSA report on the failure of RBS/HBOS then you may change your tune. The management were taking appalling risks and if the bank had collapsed, they would not have been able to just walk off into the sunset, lessons unlearned as they now have. It would also have been a shot across the bows of the other banks to sort out their banking practices.

If a larger employer was on the verge of going under because of bank mismanagement, then the government and other banks could have come up with a solution. What we didn't need is to underwrite 100% of deposits. Why on earth do we have the FSA deposit guarantee if it never gets used because the debt is placed onto the taxpayer?