Econintersect: According to Reuters, German finance minister Wolfgang Shaeuble said on Sunday (17 March 2013) that Germany would have preferred to honor deposit guarantees in Cypriot banks up to the €100,000 insured limit. The bailout agreement reached early Saturday included a 6.5% "tax" on all of the accounts below the limit. Larger accounts will contribute 10% of balances to the bailout. The European Commission, the European Central Bank (ECB) and the IMF (International Monetary Fund), along with representatives of the Cyprus government, came up with a plan that involves €10 billion in bailout funds from international sources and €6 billion from bank deposits.
There is fear that the actions in Cyprus may destabilize banking in Europe as suspicion that deposit insurance may not be honored could produce bank runs in many countries.
GEI News (see Sources for link) has a comprehensive news story on what is involved and a wide sampling of opinion from financial news sources.
- Germany would have protected insured deposits - Schaeuble (Reuters, The Daily Star Lebanon, 17 March 2013)
- How to Start a Bank Run: Confiscate Deposits (GEI News, 16 March 2013, updated 17 March)