Panic-stricken bank depositors in Cyprus emptied ATM machines across the nation after the surprise announcement Saturday that, as part of an extremely controversial European Union and International Monetary Fund bailout deal, authorities would seize up to 15 percent of all savings deposited in Cypriot banks. Markets across Europe plunged as fears of contagion or even a large-scale bank run in the region plagued investors, with the single euro currency falling to multi-month lows and gold rising back above $1,600 following news of the $13 billion scheme.
Critics ranging from banks and market analysts to politicians and even establishment media outlets lambasted the EU and IMF plan, saying it creates uncertainty and amounts to brazen wealth confiscation. Citizens and foreigners with money deposited in Cyprus, meanwhile, expressed outrage over the controversial scheme as well, demanding that it be halted immediately. Aside from Cypriots, Russians and Britons are expected to be among the hardest hit.
Despite imposing a $500 limit on withdrawals and a ban on online transfers, most ATM machines in Cyprus were completely drained of funds over the weekend as nervous depositors lined up to save what they could before the confiscation begins. March 18 is a national holiday, meaning financial institutions are closed. However, banks in Cyprus may also face an extended so-called “banking holiday” as national politicians iron out the details of the supposed one-time “stability” tax with EU and IMF policymakers.
The original EU-IMF plan would see accounts with less than $130,000 taxed at almost seven percent, while those above that threshold would have 10 percent confiscated by authorities. Anyone with more than 500,000 euros could lose 15 percent. However, some reports indicate that the initial EU-IMF plan called for seizing up to 40 percent of all savings.
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