March 27, 2013
Cyprus bail-out: savers will be raided to save euro in future crises, says eurozone chief
Savings accounts in Spain, Italy and other European countries will be raided if
needed to preserve Europe’s single currency by propping up failing banks, a
senior eurozone official has announced.
needed to preserve Europe’s single currency by propping up failing banks, a
senior eurozone official has announced.
The new policy will alarm hundreds of thousands of British expatriates who
live and have transferred their savings, proceeds from house sales and other
assets to eurozone bank accounts in countries such as France, Spain and Italy.
The euro fell on global markets after Jeroen Dijsselbloem, the Dutch chairman
of the eurozone, told the FT and Reuters that the heavy losses
inflicted on depositors in Cyprus would be the template for future banking
crises across Europe.
of the eurozone, told the FT and Reuters that the heavy losses
inflicted on depositors in Cyprus would be the template for future banking
crises across Europe.
“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 recapitalise
yourself?’,” he said.
you in the bank going to do about that? What can you do to recapitalise
yourself?’,” he said.
“If the bank can’t do it, then we’ll talk to the shareholders and the
bondholders, we’ll ask them to contribute in recapitalising the bank, and if
necessary the uninsured deposit holders.”
bondholders, we’ll ask them to contribute in recapitalising the bank, and if
necessary the uninsured deposit holders.”
Ditching a three-year-old policy of protecting senior bondholders and large
depositors, over €100,000, in banks, Mr Dijsselbloem argued that the lack of
market contagion surrounding Cyprus showed that private investors could now be
hit to pay for bad banking debts.
depositors, over €100,000, in banks, Mr Dijsselbloem argued that the lack of
market contagion surrounding Cyprus showed that private investors could now be
hit to pay for bad banking debts.