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From the story linked by Jerome in a top-level comment: Levy plan `bleak day for banking union' (FT.com, March 18, 2013)
There is an added irony to the situation in the fact that, to the casual observer, the Cypriot banking system looked like a model for others to follow in the wake of the financial crisis. The island's banks have about €68bn of deposits, which they use to fund their lending, with only minimal reliance - less than €3bn - on so-called wholesale funding in the bond markets.

People who defend the Cypriot plan say the funding structure was the reason why there was no alternative to hitting depositors - junior bonds, which are being wiped out, amounted to just €2.5bn, while the €0.2bn of senior unsecured bonds have been left alone, on the grounds that to give them a haircut would generate a negligible economic contribution but undermine investor sentiment.

Since Lehman Brothers collapsed more than four years ago, deposit-funded balance sheets like Cyprus's have been the envy of many banks around the world. Burnt by the realisation that in times of crisis bond markets dry up, leaving long-term lending commitments potentially unfunded, banks have frantically shrunk non-essential lending and tried to boost deposits as their core funding mechanism.

guaranteed to evoke a violent reaction from police is to challenge their right to "define the situation." --- David Graeber citing Marc Cooper
by Migeru (migeru at eurotrib dot com) on Mon Mar 18th, 2013 at 08:17:44 PM EST
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