The Cyprus Contagion Spreads


wealthymatters

At the time of the banking crisis in Cyprus I wrote about the risk of governments falling in love with the deal they had hammered out then and making it general policy in other countries.And how this can spell disaster to savers.Link

My worst fears stand confirmed.Remember governments tend to copy each other.Here is a news article I found buried in the back pages of the Economic Times yesterday:

EU strikes deal to push cost of bank failure on investors BRUSSELS: The European Union agreed on Thursday to force investors and wealthy savers to share the costs of future bank failures, moving closer to drawing a line under years of taxpayer-funded bailouts that have prompted public outrage. After seven hours of late night talks, finance ministers from the bloc’s 27 countries emerged with a blueprint to close or salvagebanks in trouble. The plan stipulates that shareholders, bondholders and depositors with more than 100,000 euros ($132,000) should share the burden of saving a bank.  Read more of this post

So How Safe Are Bank Deposits?


wealthymatters

If you thought that by ensuring that you kept your money in scheduled banks only and in a way that the deposits were fully covered by deposit insurance, your money would be safe,think again.

Its not impossible that what is happening in Cyprus could happen to you too.You can catch up with the Cyprus story here:Link

Apparently this is not the first instance of a deposit levy.Here are some other examples:

1.In July 1992 Italy’s Socialist Prime Minister Giuliano Amato imposed a one-off levy of 0.6% on bank accounts.And again there are calls to repeat the action in Italy to tackle the national debt. Read more of this post

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