Cyprus Bank Holiday, Run On The Banks = Financial Meltdown

Cyprus Banking Crisis: Panic Over Bailout Plan & Trying To Avert Financial Meltdown , Evidence of Deteriorating EUR & EU Collapse



Leaders in Cyprus and Brussels scrambled Monday to contain the fallout from an unprecedented effort to force ordinary bank depositors in this crisis-hit nation to pay for part of an international bailout, as stock markets faltered on concerns about the wider implications for Europe's long-running debt crisis. President Nicos Anastasiades was trying to compel policy makers in Brussels to soften demands for a tax to be assessed on Cypriot bank deposits, saying European Union leaders used "blackmail" to get him to agree to those conditions early Saturday in order to receive a bailout package worth 10 billion euros, or $13 billion. Cyprus, whose banking system is verging on collapse, is now the fifth nation in the 17-member euro union to seek financial assistance since the crisis broke out three years ago. As anger in this country swelled against the measure, Mr. Anastasiades delayed an emergency vote parliamentary vote on the bailout plan until Tuesday, the second step in as many days. Faced with a lack of support from lawmakers, the vote could be delayed until as late as Friday. The government also said it would keep Cypriot banks shuttered until at least Thursday, well beyond a bank holiday that was supposed to end Monday, a move aimed at staving off a possible bank run. A public holiday in Spain on Monday prevented savers worried by the Cypriot bailout from rushing to their banks, but there were no queues at cash machines and few signs of nervousness from investors. "I don't think there is any chance of contagion because Spain has already confronted this situation, like Ireland and other member states," said Agriculture minister Miguel Arias Cañete. "The process of cleaning up [banks] has already been done here, and the situation is not the same because the conditions are different to the Cypriot case." The government's calm at the news that, for the first time in the euro crisis, bank deposits would be raided to help finance a bailout, contrasted with warnings from commentators that a dangerous precedent had been set which might one day provoke a run on Spanish banks. "This could bring contagion to other banking systems with problems," warned Columbia business school professor Tano Santos on the Nadaesgratis blog run by Spanish economists. "Bank deposits were a red line, but that has now been crossed - even if they try to call it a tax on wealth. We shall see how savers in other countries react." "There are parallels to the Spanish case, but the big difference as far as savers are concerned is that the conditions for Spain were established last year and did not involve any levy on savings," said Carlos Segovia, of El Mundo newspaper. Russia condemns 'unfair' Cyprus bank levy as bailout fears grow Putin says proposed levy on bank deposits in Cyprus, a favoured offshore haven for Russian big business, would be dangerous