Raid on Cypriot Savers’ Accounts: Further Reduces Faith in Banks

Written by Karen Bryan

Yellow piggy bankUpdate 25 March 2013 –  A deal has been reached whereby bank deposits of up to 100,000 Euro will be fully guaranteed. However deposits of over 100,00 Euro will face ,as yet, unconfirmed levy, rumoured to be as high as 40%. I think this is a very sensible move to restore some of the lost faith in banks engendered by the initial levy proposal. It highlights the importance of not keeping more than 100,000 Euro or £85,000 of your savings with one financial institution.

I was horrified to read on  that Cypriot savers will have to pay a levy on their savings to help fund the IMF and Eurozone bailout. Savers with under 100,000 Euro will pay a levy of 6.75%, those with more than 100,000 Euro will pay 9.9%.

Now it’s bad enough getting rates of interest which are lower than the rate of inflation on your savings. However, if you are going to lose part of your savings to help prop up the banking system, it really is a step too far.

This Cypriot raid on savers is going to make people think twice about putting their cash into a bank and undermine consumer’s confidence in the banking system. –