Covered at Reason 24/7: Spaniards Shield Assets in Bitcoin To Avoid Bank Account Grab


Reason 24/7

The great Cypriot bank account grab of 2013 may or may not be off. Sure, Cyprus's lawmakers rejected a proposal that would carve a chunk out of the deposits of every depositor in the country, but officials are back for another try. The latest proposal would nationalize the country's pension funds and steal a little bit less from bank accounts than was originally envisioned. Banks remain closed and funds frozen while the details are worked out. Perhaps unsurprisingly, people well beyond the boundaries of the tiny island nation are scared shitless by the idea that government officials might just help themselves to private savings to pay ill-considered government bills. In just two days, the value of Bitcoins has risen 15 percent as Spaniards convert euros into the digital currency.

From Bloomberg Businessweek:

Since Sunday, a trio of Bitcoin apps have soared up Spain's download charts, coinciding with news that cash-strapped Cyprus was planning to raid domestic savings accounts to pay off a $13 billion bailout tab. Fearing contagion on the other end of the Mediterranean, some Spaniards are apparently looking for cover in an experimental digital currency.

"This is an entirely predictable and rational outcome for what's happening in Cyprus," says Nick Colas, chief market strategist at ConvergEx Group. "If you want to get a good sense of the stress European savers are feeling, just watch Bitcoin prices."

The value of the virtual currency has soared nearly 15 percent in the last two days, according to the most-recent pricing data. "One hundred percent of that is due to Cyprus," says Colas. "It means the Europeans are getting involved."

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