Coming Cyprus Bank Raid a Warning to Rest of Europe
Other countries received bailouts without being required to raid domestic bank accounts, may not happen again
The raid on Cypriot bank deposits, held in the name of ordinary people, businesses, institutions, communities, and prudent savers, breaks one of the fundamental trust-based relationships that has sustained western societies for centuries.
It means, too, that the link between property and material security is weakened for all Europeans living in societies with a weak economy.
The €10bn Cypriot bailout agreed with the EU and IMF demanded that all bank customers pay a one-off levy — a rate of 12.5% has been suggested for deposits over €100,000. Unsurprisingly, this has led to heavy cash withdrawals — so much so that the island's banks will not reopen until Thursday. It sets a precedent that will reverberate across Europe and find particular resonance in other supplicant countries dependent on external finance to sustain state services.