Alarming quote from Reuters Breaking News today 3/18: "If depositors in Cyprus and across Europe fear for their deposits, there is a risk that these depositors will withdraw their money en masse, which constitutes the first step of a bank run. There is a serious risk of contagion to other peripheral euro zone countries, most likely via loss of confidence and increased volatility in financial markets. Although not our central forecast, the risk of a bank run spreading across the euro zone has increased, which would be hardly stoppable and have extremely detrimental consequences."
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The important thing is, this idea is the one being pushed by the European Union as terms for a Cyprus bailout!
The word "precedent" is coming up a lot in the outraged comments: Major concern that this is an attack on principles of banking law that everyone in the EU has been able to depend upon for decades --- that the government wouldn't just invade the banks and take the money!
I don't have a good feeling about this. The Cyprus Parliament discussion of this has already been postponed till Tuesday, presumably for major country consultation. The Reuters European stock market commentators are writing masterpieces of subtle suggestions not to "buy into" the market just yet, in case "prices improve," which I take to be a euphemism for "plunge."
Can banking survive a raid by government on savers' bank accounts?
What if it happened here?
********************************************************************
The important thing is, this idea is the one being pushed by the European Union as terms for a Cyprus bailout!
The word "precedent" is coming up a lot in the outraged comments: Major concern that this is an attack on principles of banking law that everyone in the EU has been able to depend upon for decades --- that the government wouldn't just invade the banks and take the money!
I don't have a good feeling about this. The Cyprus Parliament discussion of this has already been postponed till Tuesday, presumably for major country consultation. The Reuters European stock market commentators are writing masterpieces of subtle suggestions not to "buy into" the market just yet, in case "prices improve," which I take to be a euphemism for "plunge."
Can banking survive a raid by government on savers' bank accounts?
What if it happened here?