levy

EU Official: Cyprus Was A Special Case, But…

HELSINKI (Reuters) – Big bank depositors could take a hit under planned European Union law if a bank fails, the EU’s economic affairs chief Olli Rehn said on Saturday, but noted that Cyprus’s bailout model was exceptional.

Olli Rehn

“Cyprus was a special case … but the upcoming directive assumes that investor and depositor liability will be carried out in case of a bank restructuring or a wind-down,” Rehn, the European Economic and Monetary Affairs Commissioner, said in a TV interview with Finland’s national broadcaster YLE.

“But there is a very clear hierarchy, at first the shareholders, then possibly the unprotected investments and deposits. However, the limit of 100,000 euros is sacred, deposits smaller than that are always safe.”

The European Commission is currently drafting a directive on bank safety which would incorporate the issue of investor liability in member states’ legislation. (more…)

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NEVER ENDING MISTAKES OF AN INCOMPETENT EU MAY BE LEADING TO ITS DISSOLUTION

lc--280In the morning hours of March 16,2013 the Eurogroup issued its infamous statement which could precipitate the dissolution of the eurozone and perhaps of the EU. It starts with words of welcome. ”The Eurogroup welcomes the political agreement reached with the Cypriot authorities on the cornerstones of the policy conditionality underlying a future macroeconomic adjustment programme…………” It continues wth difficult to understand words with double meaning until it gives the coup de grace. ”These measures include the introduction of an upfront one-off stability  levy applicable to resident and non-resident depositors……”  With this sentence the Eurogroup put an end to economic stability in the EU since for the first time in its history, the EU steals money belonging to bank depositors, under the guise of a so-called stability levy. A tax would be imposed on accounts under 100.000 euros and a heavier tax for accounts over 100.000.

Two days later, Cypriot Parliament voted against this decision. Not one member of Parliament voted in favour. The banks closed for more than a week, as depositors were able to get some money from ATM machines. The population, rightfully angry, demonstrated and protested against state robbery, while one angry depositor tried to break in his bank with a tractor. The President of the Eurogroup, simply took note of the decision of the Parliament while Merkel said that she would respect the decision. The decision of Parliament gave courage to the people of Greece, which were quite disappointed with the docile position taken by its Parliament which adopted with a great ease, measures that were even violating the Greek Constitution. (more…)

Cyprus rejects bailout deal leaving eurozone facing fresh crisis

Cash-strapped nation expected to seek funding lifeline from Russia after dramatic no vote in country’s parliament

 in Nicosia and 
The GuardianTuesday 19 March 2013 21.09 GMT

Protesters outside Cypriot parliament

A Cypriot protester outside the country’s parliament after hearing news that MPs had rejected the bailout deal. Photograph: Filip Singer/EPA
 

The Cypriot parliament has thrown out a controversial plan to skim €5.8bn from savers’ bank accounts, in a move that risks plunging the eurozone into a fresh crisis and heightens expectations that the cash-strapped nation will seek a funding lifeline from Russia.

Cyprus has just 24 hours to find a solution to its funding gap before its banks are due to reopen following the dramatic no vote on Tuesday night, which failed to support a hastily renegotiated change to the original deal.

With the crisis escalating, an RAF flight carrying €1m (£850,000) in low denomination notes set off for Cyprus to provide cash for 3,000 British service personnel based on the Mediterranean island.

The banks have been shut since Friday and electronic transactions halted, although cash machines are still working and the Ministry of Defence said the euros were being flown in as “contingency measure”.

About 2,000 of the military staff, who typically serve out 18- to 24-month postings to the island, have their salaries paid into local accounts. The MoD said it was “approaching personnel to ask if they want their March, and future months’ salaries paid into UK bank accounts, rather than Cypriot accounts”.

Even before the no vote was announced, the euro had already slumped to its lowest level in four months after speculation that the Cypriot finance minister, Michalis Sarris, had resigned.

Sarris, who was in Moscow ahead of his meeting with his Russian counterpart on Wednesday, was forced to text-message Reuters to deny the quick-spreading rumours that he had quit.

There were also reports that the banking arm of the Russian energy company Gazprom might pump cash into Laiki, Cyprus’s second largest bank, which is in urgent need of a capital injection. Gazprom officials insisted this was not being planned. (more…)

Savers across Europe will look on in horror at the Troika’s raid on Cyprus

It’s now become clear: the threat to European savers and banks isn’t anti-austerity parties but the Troika

The GuardianSunday 17 March 2013 17.06 GMT

People withdraw money from a cashpoint machine in the Cyprus capital, Nicosia

Account-holders withdraw money from a cash machine in the Cyprus capital, Nicosia. Photograph: Barbara Laborde/AFP/Getty Images
 

The imposition of a levy on savers in Cypriot banks marks a new turn in the European crisis. Savings of over €100,000 will be subject to a 10% tax, and those under €100,000 one of 6.7%, although it’s reported these levels may change. The raid has been instructed by the “Troika” – the European commission, the IMF and the European Central Bank – as part of a characteristic “take it or leave it” ultimatum to the Cypriot government. The parliament in Nicosia is being pressed to ratify the deal with the threat that without it there will be no bailout funds and the ECB will withdraw all liquidity support to the stricken banks.

The Troika and its supporters have justified the levy by arguing that the state could not support the debt burden of a bank bailout. But this simply means the debt burden has been transferred from the banks, where it properly belongs, to households, who had no part in their lending decisions.

As part of that propaganda campaign, the focus has been on Russian oligarchs and tax evaders who have been laundering funds through Cypriot banks. In fact, among those caught in the upper savings bracket are bound to be pensioners for whom this represents their entire life savings, and others who have recently borrowed enough money to buy a modest home. But even if only oligarchs were affectedE, this is surely an admission of guilt by the European and international authorities, who are responsible for the global regulation of banks and co-ordinating anti-money laundering activities. Their own failure can hardly be a justification for expropriating the small savers of Cyprus. (more…)