Panicked Cyprus Stalls, Braces for Bank Run

Country considers levy of up to 15%

By Matt Cantor,  Newser Staff

Posted Mar 18, 2013 3:55 AM CDT | Updated Mar 18, 2013 7:58 AM CDT

(Newser) – Things are getting crazy in Cyprus, which has again postponed a vote that could levy a tax on bank depositors to fund the nation's bailout, the BBC reports, this time until tomorrow. Its effects, however, are already rippling through Europe, where stock markets and the euro have plummeted, and Cypriots were yanking their money from ATMs yesterday. The country has extended today's bank holiday through tomorrow, and the New York Times notes that many think that will be extended to Wednesday. Some fear a run on banks could hit Spain and Italy amid concerns the levy might not be limited to Cyprus.

The hit could now be as high as 15% on deposits of more than $646,000, an insider tells the Wall Street Journal, while smaller deposits could be subject to a 3% or 10% tax. The goal is $7.6 billion, in the first European bailout to be financed by depositers. Still, there's no guarantee the measure will pass. There's no majority party, Reuters notes, and three parties have already refused to support it. But Cyprus President Nicos Anastasiades is calling on lawmakers to take action, saying that failure to back the levy could result in a "complete collapse of the banking sector." A lawmaker, however, offered a different take: "Essentially parliament is called to legalize a decision to rob depositors blind, against every written and unwritten law."

In this image made from video, Cyprus' president Nikos Anastasiades addresses the nation in a televised broadcast, Nicosia, Sunday, March 17, 2013.
In this image made from video, Cyprus' president Nikos Anastasiades addresses the nation in a televised broadcast, Nicosia, Sunday, March 17, 2013.   (AP Photo/RIKSAT)
A man sits and drinks as women use the ATM machine outside of a Bank of Cyprus branch in the capital, Nicosia, Cyprus, Sunday, March 17, 2013.
A man sits and drinks as women use the ATM machine outside of a Bank of Cyprus branch in the capital, Nicosia, Cyprus, Sunday, March 17, 2013.   (AP Photo/Petros Karadjias)
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