On Saturday, the EU unveiled a 10 billion euro plan to rescue Cyprus' outsized banking sector and avoid a default. The EU's plan has required a one-time tax of 6.755 on bank deposits of less than 100,000 euros and 9.9% for those over that amount, starting Tuesday. Citizens of Cyprus are rushing to the bank to withdraw as much money as possible to avoid this tax. This is a complete disaster occurring in Cyprus. The fear and expectations of many Europeans is that this may happen again soon, the EU may have to bail out another nation. "The question is whether this becomes a full-blown crisis or a mini-crisis," said Steven Englander, global head of foreign exchange strategy at Citi. With Cyprus being such a small nation, this will not be a large bailout plan, but it is not encouraging to see that Cyprus is close to defaulting. Could this bailout lead to a global financial disaster? While Europeans prepare for the worst, the U.S. Feds plan to meet to discuss interest rates. The current interest rates in the United states are at a record low, which could be an encouraging sign for our economy.
Monday, March 18, 2013
Worries over Cyprus bailout deal
http://money.cnn.com/2013/03/17/investing/stocks-lookahead/index.html?iid=Lead
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It is a really good article , the approach taken to recover the banks has already sparked public anger and has lead to heavy cash withdrawals especially from the ATM's. Banks are also expected to remain shut to prevent mass withdrawals.This might also have an effect on the weaker economies where the public might become worried and have similar bank runs.
ReplyDeleteThese expectations that the citizens of Cyprus are going to completely hurt them just because of an idea. They need to really think about what they are doing to their economy by taking out their money because if they all take their money out how is the government going to run without money since that is one of their main money supply. Then they will surely become the poorest country in the world. If the government has no money to spend and pay people off how are companies and banks going to be payed off then it is a whole chain reaction of economic crisis that happens.
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