The Cyprus rescue and a top European official's comments signal rich eurozone governments are ending their support for troubled banking sectors, which now face greater bank-run risks as additional deposit seizures loom.
The island tax haven averted an immediate meltdown with a last-minute deal to impose steep losses on bondholders and deposits above 100,000 euros at the top two Cypriot banks. That will secure a 10 billion-euro international bailout.
Cyprus was billed as a unique situation, but the head of eurozone finance ministers, Jeroen Dijsselbloem, said responses to future financial crises will resemble Cyprus' rescue with bank shareholders, bondholders and uninsured depositors subject to losses.
Source: Investors Business Daily. Read full article. (link)