also this is going to happen in Malta, Luxembourg and Slovenia which will be the first one and will happen this year ...

edited to right the wrong country ...

Slovakia next week by all reports - they only need €2.5bn though

Definitely not enough to make it important to the ECB, so expect a run on the banks if the public get wind of this. I have been reading more about the details of the Cyprus deal, and it is even worse than the sums ernie first reported on.



http://www.zerohedge.com/news/2013-03-29/and-scene-big-cypriot-depositors-face-complete-wipe-out

First of all 22.5% is gone for ever.
Another 40% will get interest but will never be repaid, and the last 37.5% will be converted into shares in what is in effect a worthless bank.

So if you had €150 000 in the bank last week, you would have nothing to withdraw. Though you could get interest on €60 000 but what rate? and you would suddenly be a shareholder €56 250 worth in a bank that will have everyone withdrawing its money so you might get absolutely nothing.

If you are in Canada New Zealand and the UK this will be the new policy from central banks, in regards to bank failures. The policy is called "Bail In" and is supposed to spare tax payers but screw customers.

What if you've just sold a house and haven't paid out towards a new one yet?

Split it as soon as possible, even solicitors segregated accounts would be hit by this new policy. Make sure each account is below £83000 (to allow for interest) in the UK You could always merge the payments when you need to pay for the new place. If there are rumblings about a bank closing then cash is king, and avoid banks altogether.

Your first principle during these times is holding onto your money not worrying too much about making that extra 0.25%. If you get a Cypriot style haircut then you could kiss good bye to any plans for a long time.

I think you are mistaken in applying that to the entire €150,000. I believe it only applies to the uninsured portion which is €50,000, and that the first hundred grand is as safe (or not) as any other insured deposit.

I don't know what country you are n Matt, but bear in mind that Amnesia's advice about panicking and keeping all your money in a biscuit tin is questionable under any circumstances in any developed world country that has rule of law and enforceable contracts. But doubly so if you are in a country which enjoys the additional security of a monetary backstop (i.e. a country with a central bank and a currency of its own).

<scratches head> In a lot of cases aren't they the same people?


Cyprus was a 'country that has rule of law and enforceable contracts.' Turns out the government makes the laws and can change them any time it feels like it. In the UK it can apparently even change them retrospectively if it wants to. I honestly hope your confidence is well founded, but I don't share it.

That's my understanding too but for some it is easier to copy and paste whatever they find that fits into their theories.

Never mind that it is Slovenia that is in risk, not Slovakia that is mentioned by THREE different people above. It is all one crowd here and who needs fact when you can make stuff up as you see fit...

Don't forget, people often do that just to annoy you.

Oh good, I was worried they are just being ignorant

Seriously, insured deposits in this country - and almost anywhere else in the world - are safe. At least in as much as, if they ever prove unsafe, I really don't know what kind of fool would imagine that a stash of £20 notes stored under their bed was still worth anything.

Technically, now that they are not scamming insured deposits any more, the current proposals in force in Cyprus are exactly what is expected in these cases: shareholders are wiped out first, then bondholders, then uninsured depositors take the next hit. If a government opts to intercede and shield any of those groups from losses it is entirely optional. It's only when they renege on the guarantees for insured deposits that there is as much cause for alarm as we are getting right now - and that option was abandoned. I'm pretty sure they would have been severely pursued through the courts in London or New York if they hadn't because the designation of that levy as a tax rather than a bail in looked pretty transparently artificial.

Either way, a country like ours is able to print new currency as a backstop against this sort of thing should our deposit guarantees prove insurmountable. It would be insanity to prefer to let the entire system collapse rather than spread the pain by increasing money supply.

Those of us who don't have unhealthy fantasies about shouting "I told them this would happen" to a post apocalyptic doomscape full of skulls should probably be careful about encouraging those who clearly do.

Learning to draw £10 notes. Where's my Spirogaph?

In Cyprus there are few bondholders, so while shareholders are getting wiped out, there are few bondholders to worry about, but the raid on uninsured depositors is there to protect the counter party banks be they in France or Germany or elsewhere. Overall the problem is that governments can and will change the rules. Yes while our country can print as much money as necessary to bail out the banks it still does not alter the fact that they would be insolvent and are sitting on billions of non performing assets. For most of us it is all pretty irrelevant as we are all well within the insured limits anyway, unless you have sold a home or close to retirement.

For most people yes, but if you are super rich and manage to get your money out of the high risk banks or countries then it means everyone else gets screwed apart from you. For most bank customers they are usually in debt and few have savings worth worrying about. Something like a third of the population could not lay hands on £500 in an emergency. So as long as insured deposits are covered then any bail in would have minimal impact on most people, apart from the very long bank holiday while they try and fix the banks. If they do tax all insured depositors as well then the impact would minimal for most even if it did mean losing 10% of your deposits considering most people have less than £1000 in their accounts anyway.