WHO COULD HAVE SEEN THIS COMING? After Cyprus Bank Bailout, Depositors Race to Withdraw Their Cash. Is the Rest of Europe Next?
If you were trying to crash the system, I can’t imagine a better way than reneging on deposit insurance guarantees. “If Cyprus had done this on its own, the country would be in trouble, but the rest of the world would just emit a bemused sigh and move on. Now, however, this plan has the imprimatur of the EU stamped on it–and so people are going to be looking hard at other European banking systems. Which other nations’ depositors might have to take a similar haircut in the future?”