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The government also extended a bank holiday that was put in place to try to stop a run on the banks. The holiday was supposed to end Monday night. Now, banks wi

by uvdiv 14y ago

The government also extended a bank holiday that was put in place to try to stop a run on the banks. The holiday was supposed to end Monday night. Now, banks will not be opening their doors Tuesday, as planned. There was talk that they might not open Wednesday, either. [...] “As soon as banks in Cyprus reopen, people will rush to take all their money out, because they don’t believe this is a one-off deal,” he said. “When a bank run happens, the E.C.B. will have to pump in liquidity,” he added, “and what you will have is a shell of a banking system supported by E.C.B.-eligible Cyprus bonds, which will rocket the debt of Cyprus out of control.”

samstave 14y ago
There was a comment that a lot of russian mob money is held in Cyprus banks. I wonder if this is actually an attack on them in an effort to take the money from the russian mob. I also predict acts of vandalism on the banks. Where the goal is to cost the banks money to repair their facilities given the situation.
- Lazare 14y ago
  Definitely not. The confiscation is 6.75% on small accounts (mostly EU savers and pensioners) who are covered by deposit insurance, and 9.9% on large accounts (yes, a lot of which is Russian money). Overall it will collect a total of around €6B. If you wanted to get €6B from just the accounts that aren't covered by deposit insurance you'd need to confiscate around 30%. So, basically, the EU had a choice of either taking 30% from the (mostly Russian) wealthy and 0% from the poor and middle class (a lot of whom are pensioners), or taking 9.9% and 6.75%, and they went with the latter. If anything, this entire debacle is an effort to protect Russian (and Cypriot) oligarchs at the expense of ordinary people. As a bonus, it also makes bank runs, the collapse of the EU financial system, and the destruction of the eurozone much more likely. Very odd.
  - samstave 14y ago
    Thanks for that info. What was the potential impact of doing nothing? As this action "makes the collapse of the EU financial system... much more likely" -- what would the impact have been to the EU financial system had nothing been done at all.
- JumpCrisscross 14y ago
  10% is in the neighbourhood of cost-of-doing-business for a CIS corporate shell. The fact that there was so much pain inflicted on small accounts means someone has an eye out for the island's future as an offshore financial centre (read: Russian tax haven).
- hippich 14y ago
  Regarding talks about russian mobs: there is indeed a lot of russian money in cyprus, but not all of it are from criminal activity. The way business works in post-USSR countries forces businessmen to never keep money in the country. And Cyprus banks happened to be most friendly with russian business.

by uvdiv 14y ago

samstave 14y ago

There was a comment that a lot of russian mob money is held in Cyprus banks. I wonder if this is actually an attack on them in an effort to take the money from the russian mob. I also predict acts of vandalism on the banks. Where the goal is to cost the banks money to repair their facilities given the situation.

Lazare 14y ago
Definitely not. The confiscation is 6.75% on small accounts (mostly EU savers and pensioners) who are covered by deposit insurance, and 9.9% on large accounts (yes, a lot of which is Russian money). Overall it will collect a total of around €6B. If you wanted to get €6B from just the accounts that aren't covered by deposit insurance you'd need to confiscate around 30%. So, basically, the EU had a choice of either taking 30% from the (mostly Russian) wealthy and 0% from the poor and middle class (a lot of whom are pensioners), or taking 9.9% and 6.75%, and they went with the latter. If anything, this entire debacle is an effort to protect Russian (and Cypriot) oligarchs at the expense of ordinary people. As a bonus, it also makes bank runs, the collapse of the EU financial system, and the destruction of the eurozone much more likely. Very odd.
- samstave 14y ago
  Thanks for that info. What was the potential impact of doing nothing? As this action "makes the collapse of the EU financial system... much more likely" -- what would the impact have been to the EU financial system had nothing been done at all.
JumpCrisscross 14y ago
10% is in the neighbourhood of cost-of-doing-business for a CIS corporate shell. The fact that there was so much pain inflicted on small accounts means someone has an eye out for the island's future as an offshore financial centre (read: Russian tax haven).
hippich 14y ago
Regarding talks about russian mobs: there is indeed a lot of russian money in cyprus, but not all of it are from criminal activity. The way business works in post-USSR countries forces businessmen to never keep money in the country. And Cyprus banks happened to be most friendly with russian business.