# Bank deposits get the "haircut" treatment in Cyprus. What happens next?

**URL:** <https://boards.straightdope.com/t/bank-deposits-get-the-haircut-treatment-in-cyprus-what-happens-next/653089>\
**Category:** Great Debates\
**Created:** [March 16, 2013, 1:51pm UTC](https://boards.straightdope.com/t/bank-deposits-get-the-haircut-treatment-in-cyprus-what-happens-next/653089 "2013-03-16T13:51:10Z")\
**Posts on this page:** 4\
**Page:** 9

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**Author:** ![MOIDALIZE](https://avatars.discourse-cdn.com/v4/letter/m/e274bd/32.png) [@MOIDALIZE](https://boards.straightdope.com/u/MOIDALIZE)\
**Post date:** [March 28, 2013, 4:11pm UTC](https://boards.straightdope.com/t/bank-deposits-get-the-haircut-treatment-in-cyprus-what-happens-next/653089/161 "2013-03-28T16:11:29Z")

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> [@ralph124c](#):
>
> Reading this thread, I remembered hos Jimmy Stewart reacted (in the movie “It’s A Wonderful Life”):  
> -(Stewart): “folks..your money isn’t here-its in the mortgages we’ve written..in the homes you own..”  
> So, what is the Cypriot banks invest in?

Lots of exposure to Greece.

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**Author:** ![Steophan](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/steophan/32/9595_2.png) [@Steophan](https://boards.straightdope.com/u/Steophan)\
**Post date:** [March 28, 2013, 4:27pm UTC](https://boards.straightdope.com/t/bank-deposits-get-the-haircut-treatment-in-cyprus-what-happens-next/653089/162 "2013-03-28T16:27:20Z")

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> [@Grumman](#):
>
> How the hell do you perceive putting money in a bank account as speculation?

You’re exchanging the risk of holding the money yourself, which is the risk of theft and risk of devaluation due to inflation, for the risk that the bank will not honour your deposit, for whatever reason. Often, that risk will be lower - and it’s quite possible that it still is in Cyprus, if the banks are paying any interest on deposits.

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**Author:** ![Ludovic](https://avatars.discourse-cdn.com/v4/letter/l/7ab992/32.png) [@Ludovic](https://boards.straightdope.com/u/Ludovic)\
**Post date:** [March 28, 2013, 5:54pm UTC](https://boards.straightdope.com/t/bank-deposits-get-the-haircut-treatment-in-cyprus-what-happens-next/653089/163 "2013-03-28T17:54:32Z")

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> [@Steophan](#):
>
> You’re exchanging the risk of holding the money yourself, which is the risk of theft and risk of devaluation due to inflation, for the risk that the bank will not honour your deposit

I think the crux of the speculation argument is that, normally, speculation entails chasing high returns for high risk. Now, even if the high risk was there, did the Cypriot banks return substantially more than what you could get elsewhere in Europe?

That was, indeed, the case with Iceland, so since they were offering well above average returns, I’m comfortable with calling foreign investors there “speculators”. But if that was not the case with Cyprus, then they were not chasing high returns in exchange for risk, they were chasing favorable tax treatement and money laundering in exchange for risk.

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**Author:** ![Koxinga](https://avatars.discourse-cdn.com/v4/letter/k/4af34b/32.png) [@Koxinga](https://boards.straightdope.com/u/Koxinga)\
**Post date:** [March 30, 2013, 2:53pm UTC](https://boards.straightdope.com/t/bank-deposits-get-the-haircut-treatment-in-cyprus-what-happens-next/653089/164 "2013-03-30T14:53:10Z")

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I wonder if any euro policymakers might be feeling at all nervous for crossing Russian mobsters this way? [Here’s something from last month](http://www.mirror.co.uk/news/world-news/kevin-mcgeever-kidnapped-millionaire-found-1569931), for example.

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