$50-58bn to flood out of Cyprus due to 9.9% bank deposit confiscation by the EU and into gold and even UAE banks
By: Peter Cooper
Sunday, 17 March 2013
Depositors who are waking up to find that up to 10 per cent of their bank accounts in Cyprus have been confiscated as a part of a European Union rescue operation are unlikely to leave their money in the country because of the risk of it happening again. ATM machines have already emptied on the Mediterranean island in a bid to drain accounts. All electronic money transfers have been stopped.
An estimated $50 to $58 billion of deposits are being subject to the so-called tax or special levy, which gets around what was supposed to be an EU bank deposit guarantee scheme. This is the first EU banking bailout to involve such a mandatory confiscation of depositors’ money and was agreed by finance ministers yesterday.
Ending money laundering
It is aimed squarely at the huge offshore funds held in Cyprus by Russians, much of it said to be from money laundering though how an offshore banking centre is suppposed to adjudicate on the source of offshore funds presented to them by depositors is unclear.
The EU would evidently rather not have this money deposited inside the bloc and has made its draconian ruling to frighten this money away as well as to help refinance the beleaguered Cypriot banking sector. Ironically the impact of this $50 to $58 billion leaving the system will of course be devastating and almost certainly result in another crisis for the banking system.
The cost of securing German support for the rescue package has been high indeed: the whole future of Cyprus as an offshore banking centre. Will depositors risk leaving their money in such a jurisdiction for a second round of this banking system’s collapse?