Bank Crisis

Outrage in Cyprus Over Deposit Levy

Petros Karadjias/AP

People line up use an ATM machine outside of a bank Larnaca, Cyprus, Saturday, March 16, 2013. Many rushed to cooperative banks which are open Saturdays in Cyprus after learning that the terms of a bailout deal that the cash-strapped country hammered out with international lenders includes a one-time levy on bank deposits. The move, decided in an extraordinary meeting of the finance ministers of the 17-nation eurozone in the early hours Saturday, is a major departure from established policies. Analysts have warned that making depositors take a hit threatens to undermine investors' confidence in other weaker eurozone economies and might possibly lead to bank runs.

The people of Cyprus have spoken and they want the government's mitts off their money. An unprecedented, onetime levy on all bank accounts in Cyprus (6.75 percent of all deposits below €100,000 and €9.9 percent of those above that amount) in order to meet a bailout was met with widespread anger and rushes to local ATMs to withdraw money from bank accounts. As a result, the euro fell below $1.30, and the government has now frozen bank transfers to prevent mass withdrawals. Cyprus President Nicos Anastassiades went on television to calm people and promise revenues from natural gas reserves for those who keep their money in Cypriot banks for the next two years.