After looting some 30 percent of selected bank account holders’ deposits in Cyprus on behalf of the so-called “Troika”— the European Union (EU), the International Monetary Fund (IMF), and the European Central Bank (ECB) — eurozone boss Jeroen Dijsselbloem told reporters this week that taking money from savers in other crisis-hit nations to prop up banks could become the norm. Across Europe, analysts, experts, economists, markets, and especially savers recoiled in horror, prompting the increasingly discredited Dutch Finance Minister to backtrack slightly. In Cyprus, meanwhile, anger is boiling over as authorities prepare to impose capital controls in an effort to avoid a full-blown bank run.
On March 23, when the EU and IMF plan demanded that the seizure of savings apply to all account holders, eurozone chief Dijsselbloem refused to rule out similar heists — authorities disingenuously referred to the theft as a one-time “stability tax” — in other euro-area nations. Despite claiming that no other countries were being targeted yet, the remarks sparked panic across Europe, especially throughout the economically devastated southern regions. Even bank CEOs called the move “full-blown socialism” while predicting the potential implosion of the single currency.
Earlier this week, Dijsselbloem claimed that the heist underway in Cyprus, which will wipe out up to 40 percent of large-account deposits, “does fit into the new approach towards bank rescues that is gradually evolving.” Savers in Italy, Greece, Spain, Portugal, Ireland, and beyond rightly wondered whether they would be the next victims — especially when the eurozone chief said he did not regret his comments.
In a move that almost seemed calculated to add more fuel to the already-blazing inferno, Dijsselbloem — one of the key architects behind the ECB-EU-IMF bailout scheme — then reiterated this week that anyone with savings in the eurozone could become fair game for looting. While claiming that shareholders and bondholders would be the first to take mandatory so-called “haircuts” lawlessly imposed by international officials, the single-currency area finance chief acknowledged that depositors could also be subject to government-enforced thievery to bail out banks and governments.
"If there is a risk in a bank, our first question should be 'Okay, what are you in the bank going to do about that? What can you do to recapitalize yourself?'," the Dutch eurozone chairman was quoted as saying in Reuters and the Financial Times. "If the bank can't do it, then we'll talk to the shareholders and the bondholders, we'll ask them to contribute in recapitalizing the bank, and if necessary the uninsured deposit holders." In other words, “if necessary,” anyone who has over about $128,000 in the bank could see their savings plundered.
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Photo of eurogroup chief Jeroen Dijsselbloem: AP Images