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>Merkel's Finance Minister Wolfgang Schaeuble had gone to Brussels with a firm mandate from Berlin: «no bail-in, no bailout», said a member of her government. That meant: unless depositors took a hit, there would be no agreement and Germany would not contribute towards a package for Cyprus.<
And then it gets inexplicable:
>European officials set on a figure of 5.8 billion euros to come from depositors, and refused to budge. What they had not decided in advance was how much of that should come from big, uninsured depositors, and how much from ordinary savers.<
Still why 5.8 billion? Why not 4.8 billion or whatever?
>Under a promise which still appears on the website of the Central Bank of Cyprus, deposits in its banks are insured up to 100,000 euros. Cyprus has about 30 billion euros in insured deposits, a large amount for a country of just 1 million people.
But because of its status as an offshore financial hub for foreigners - including large numbers of rich Russians - it also has 38 billion euros in uninsured deposits in bigger accounts.<
So the cypriot government had agency:
>Cyprus could have offered full protection to those with insured deposits up to 100,000 euros and still reached the 5.8 billion euro target by taxing uninsured deposits at a rate above 15 percent.<
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