What kind of behavior would you expect from a government that was contemplating this? Consider what the public reaction would be in the United States and look at what Homeland Security is doing right now.
Allowing pocket-knives back on planes? OMG, it suddenly all makes sense… You maniacs! You blew it up! Damn you! God damn you all to hell! 
I agree, would be interesting to see how history would’ve played if the Cyprus banking crisis was the Cayman Island banking crisis.
How is that relevant? You said the depositor hair-cut in Cyprus would cause a “run on deposits”. Things that happened last July weren’t caused by events of the last week. Obviously the European banking system has a lot of problems besides Cyprus, but Cyprus doesn’t seem to have made things worse in other countries.
I would. The fact that people in Portugal/Ireland/Greece/Spain haven’t done so thus indicates that they don’t think their deposits are going to vanish. Europeans seem to have taken their leaders word for it that Cyprus is a unique case, and depositors aren’t in danger elsewhere.
I just pulled up the first 3 countries that came to mind and the populace did exactly what you and I and everybody else would do if they think their deposits are in jeopardy. It’s been happening based on recent events and it’s going to continue to happen with each person who thinks their own savings is in jeopardy.
Which other countries, in the past, have nationalized private bank accounts?
OK, but that’s my point. The Cypriot deposit tax, the thing we’re actually discussing, doesn’t appear to have made depositors in the rest of the Eurozone think their savings are in jeopardy. There hasn’t been a run on Irish or Portuguese or Greek banks in the last week.
You said the plan would cause a run on Eurozone banks. It hasn’t. Maybe it will, but its difficult to see why it would weeks after the plan was announced instead of immedietly afterwords. After all, the whole point of a bank run is that it happens quickly (hence the “run”), everyone wants to get their money out before everyone else does.
For one thing, they started out saying that Cyprus was unique and that nothing they were doing would apply to anyplace else, and only in the last day or two have graduated to saying they wanted to make it a general policy.
Well, one guy speaking extemporaneously said it would be a general policy, and then he immediately walked it back and stressed it wouldn’t be general policy.
It is true that there wasn’t a bank run in Greece. But this is because there was a bank walk taking place for the last 3 years.
According to the statistics, 95% of bank accounts have less than 10K, 4.5% have between 10K and 100K and only 0.5% have over 100K. I suspect that the situation is similar to the other PIGS countries.
Cyprus was different because they were lulled in a false sense of safety and then were hit fast and hard. They didn’t have time to pull out their money.
Just like they said they wouldn’t do it at all.
That would awesome.
Perhaps if the Cayman Islands were in the EU we might have found out. 
Cayman Islanders actually are EU citizens, but the Caymans does its own thing for the most part.
well… that’s my prediction and I’m not alone. I’m guessing that promises are being made that it won’t happen but there will be measurable amount of withdrawals and that will escalate exponentially as those promises are broken.
And if you look at the link I posted it’s not just depositors in this equation. Banks need investors as well. This isn’t a Cypress problem. It’s not a European problem. It’s a world banking problem because everybody has a toe in the same water. There is too much overlap not to cause a global ripple if things start failing on a large scale.
The €100,000 guarantee is put in place to ensure that bank run doesn’t occur. But if banks can only function if the losses of big sum depositors and speculators are covered by taxpayer money then they have a faulty business case and need to go bankrupt.
As for Cyprus. It’s a pity they didn’t let the banks go bankrupt outright, but the 30-40% cut is better than nothing. I suppose it can be defined as a limited bankruptcy anyway. Lets hope it’ll be a template for future bank bankruptcies.
I was totally unaware that the Cayman Islands were a British oversea territory. I always assumed it was an independant country (and the fact that they seem to do as they please as a tax haven propably reinforced this assumption).
Learn something every day, I guess.
How the hell do you perceive putting money in a bank account as speculation?
Cyprus is an offshore tax haven few questions asked. I presume the majority of non-Cypriot large account depositors are only there for the speculation. Why else would a guy in Moscow or Miami or wherever put his money in a bank in Cyprus? Mainly tax-speculation or money laundering speculation. So before I want any taxpayer money going to reimburse deposits I want the deposit holder to document that the money is legitimate.
However it was poorly phrased. I didn’t mean the depositors. I meant that as far as the banks have borrowed money from other banks, companies, or individuals for speculative investments (Cypriot banks are apparently heavily invested in an over bloated real estate market on Cyprus) then that money should under no circumstances be reimbursed by taxpayers when the banks are in trouble. It’s a complete write-off.
That said, there are more and less speculative bank depositors as well. There was the Icelandic Icesave bank which a number of British municipals had put their money in. Clearly British municipals would not have put their money in an obscure Icelandic bank unless they were speculating in an unusual high interest rate. We need to detail when the € 100,000 depositor guarantee should be in effect, or what the bank can do with the money that is covered by the guarantee. An unusual high interest rate is an indication of the money being used for risky investments. In the future we must ensure that money guaranteed by the taxpayers cannot be used for speculative investments that promise a high interest rate. Probably we should have two categories of bank accounts: one where the guarantee is in effect, but the things the banks can do with the money is severely limited, and consequentially the interest very low; and another without guarantee where the bank can do what they want with the money, and the interests can be as high as they want.
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? Is it a temporary problem, or will this trigger a bust in Cyprus real estate, and make payback impossible?