Crisis Bailout Backfires: Depositors fear loss of savings in Cyprus debt payoff
Cyprus has delayed a vote on its controversial bank deposit levy until Tuesday. The new tax would make its citizens shoulder a 12.5-percent crisis tax on savings larger than €100,000, with a tax of 3 percent on smaller deposits.
The Cypriot government has been discussing the measure with its European creditors, Reuters reported citing an anonymous source who is close to talks.
To counterbalance the measure, the government proposed to increase the tax on large sums to 12.5 per cent from the originally proposed 9.9, the source said.
The last minute discussions are allegedly aimed at appeasing ordinary Cypriots who are about to share a major part of the anti-crisis burden imposed on Cyprus by the European Central Bank.
Cyprus became the fifth country to ask for immediate aid from the Eurozone. But in a drastic twist from the previous cases, the European finance ministers demanded Cyprus seize a significant portion of all deposits in the country’s banks in order to secure a €10 billion bailout.
The original agreement suggested 9.9 and 6.7 per cent levies on deposits above and below the €100,000 threshold respectively [link to rt.com]