Quote:
Originally Posted by Damien
They are being raided to save their own banks, and therefore maybe their savings anyway. It's a bad decision and it's good they've ditched it and are exploring alternatives but it is a bad decision caused by an impending disaster. The consequences of no action at all could result in depositors losing far more than 10%, their savings could be wiped if the two banks go under.
The way people are portraying this is that Germany wants some money and decided to bully the poor Cypriots out of their hard-earned savings. Cyprus is in serious trouble and the idea from the EU is that they'll bail Cyprus out but effectively wanted depositors to take some of the hit, to write off some of their money instead of more of it. This was a bad idea for all the reasons given (causing a bank-run, setting a dangerous precedent) but it's not really corruption.
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No, it is corruption of the worst kind. If the banks in Cyprus go under, then the deposit guarantee scheme reimburses all savers with up to €100,000. But the EUrocrats have throughout this crisis sought to make it look like no banks are actually defaulting or going under, because of the financial and political costs of it. The haircuts taken by creditors in Greece, for example, were defaults in all but name. But the lack of the name prevented default insurance schemes from paying out (and possibly being unable to pay out, precipitating a greater calamity).
Now in Cyprus, where depositors were entitled to expect their savings to be safe even if the bank went bust, they were told their savings were being tapped to rescue the bank. That is utterly perverse. It subverts an agreed procedure designed to
protect private individuals from bank failure with a cobbled together procedure that made them
liable for bank failure. And the snakes in Brussels have done nothing but point out that, because this scheme was devised to be delivered via the Cyprus government as a tax, it was in no way a default and so the deposit guarantee could not be invoked.
It was weaseling about with the rules in the worst possible way.