ATMs drained as bailout tax triggers run on bank deposits -

ATMs drained as bailout tax triggers run on bank deposits - 


In a move that could set off new fears of contagion across the eurozone, anxious depositors drained cash from ATMs in Cyprus on Saturday, hours after European officials in Brussels required that part of a new €10 billion ($12.6 billion) bailout must be paid for directly from the bank accounts of savers.
The move - a first in the three-year-old European financial crisis - raised questions over whether bank runs could be set off elsewhere.
Jeroen Dijsselbloem, president of the group of euro-area ministers, on Saturday declined to rule out taxes on depositors in countries beyond Cyprus, although he said such a measure was not currently being considered. Although banks placed withdrawal limits of €400 on ATMs, most of them had run out of cash by early evening. People around the country reacted with disbelief and anger.

''This is a clear-cut robbery,'' said Andreas Moyseos, a former electrician who is a pensioner in Nicosia, the capital. Iliana Andreadakis, a book critic, added: ''This issue doesn't only affect the people's deposits, but also the prospect of the Cyprus economy. The EU has diminished its credibility.''
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In Nicosia, about 150 demonstrators massed in front of the presidential palace late in the afternoon after calls went out on social media to protest the decision, which came with almost no warning at the beginning of a three-day religious holiday.
Under an emergency deal reached early on Saturday in Brussels, a one-time tax of 9.9 per cent is to be levied on Cypriot bank deposits of more than €100,000 effective on Tuesday, hitting wealthy depositors - mostly Russians who have put vast sums into Cyprus's banks in recent years. But even deposits under that amount would be taxed at 6.75 per cent, meaning that Cyprus's creditors will be confiscating money directly from pensioners, workers and regular depositors to pay off the bailout tab.
Cyprus's newly elected President Nicos Anastasiades said taxing depositors would allow Cyprus to avoid implementing harsher austerity measures, including pension cuts and tax increases, of the type that has wreaked havoc in neighbouring Greece. That thinking appealed to some Cypriots, including Stala Georgoudi, 56. ''A one-time thing would be better than worse measures,'' she said.
But Sharon Bowles, a British member of the European parliament who is the head of the body's economic and monetary affairs committee, said the accord amounted to a ''grabbing of ordinary depositors' money'' billed as a tax.
The surprise policy by the International Monetary Fund, the European Central Bank and the European Commission is the first to take money from ordinary savers.


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http://www.theage.com.au/world/atms-drained-as-bailout-tax-triggers-run-on-bank-deposits-20130317-2g8rx.html