Behold your future. Coming soon to a banking system near you.
Last weekend’s announcement by Cypriot President Nicos Anastasiades that, as a precondition of the acceptance of a €10 billion EU bailout, his country would impose an immediate “tax” of up to 9.9% on all deposits in Cypriot banks, sent a wave of panicked savers heading for empty ATMs through Monday, a public holiday on the small island nation. The fact that this unique method of raising state revenues is being trialled here should ring enormous alarm bells throughout Europe.
The government is simply going to confiscate your bank savings? Rob you blind? What about deposit insurance? Wouldn’t it be simpler and cheaper just to send a group of thugs armed with iron bars round to every household and take the jewellery? Oh wait, I’d better not give them any ideas. How any Cypriot citizen will ever trust their government or banking system again is beyond me. The loss of trust will be permanent, irreparable, and damage Cypriot society far more than any EU bailout could possibly help.
And there’s this: there’s far more money sitting in Cypriot banks than has been put there by its citizens. The Russian mafia runs money-laundering operations through Cyprus; estimates are that up to €19 billion of their proceeds are on deposit at any one time. Ten percent of all that lolly could go a long way towards squaring the books, but Anastasiades had better not leave his house ever again without wearing full body armour. But hey, laugh the EU commissars to each other, that’s his problem, not ours.
As we say down here in Australia, at least Ned Kelly had the decency to wear a mask.