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Savings swoop `bleak day for banking union'

The weekend decision to strip €5.8bn from the savings accounts of Cypriot banking customers has blown a hole in the EU's ambitious reforms billed as the route out of the eurozone crisis, while potentially undermining a growing reliance at banks around the world on funding their operations with customer deposits.

"This is a totally crazy decision," said one European bank chief. "This is the biggest policy mistake that the [European Central Bank] has subscribed to."

(...)

Cyprus shows that - whatever small depositors might expect or believe - those savings are not safe from overnight taxes to avert a bank collapse.
"We nailed our colours to the mast in Europe to say that [accounts] under €100,000 were protected," said a senior official involved in financial reform. "Now there is a real risk of mixed messages."

[No Shit, Sherlock!]

(...)

"It is the abrogation of an explicit guarantee," Tim Adams, managing director of the Institute of International Finance, the global banking lobby group, told the Financial Times. "This is an unsettling precedent. In future, I fear they will regret having done it."



Wind power
by Jerome a Paris (etg@eurotrib.com) on Mon Mar 18th, 2013 at 05:56:20 PM EST

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