Help comes when cyprus’s bank customers pay
The financially troubled Cyprus is receiving international aid. The Eurogroup agreed on an aid package of up to ten billion euros. In return, the country has to raise its low corporate taxes. Above all, however, bank customers should save the country from insolvency.
By Andreas Reuter, HR radio studio Brussels
The Eurogroup’s conclave lasted ten hours. Then Jeroen Dijsselbloem came and spread white smoke: "I can announce that the Eurogroup has reached a political agreement with the Cypriot government on the key points of an adjustment program," said the head of the Eurogroup.
And the long negotiations had paid off for the Europeans. The Cypriots originally asked for aid loans totaling 17 billion euros. In the early hours of the morning, the partners had traded them down significantly. "By providing a financial envelope that has been reduced to as much as ten billion euros," said Dijsselbloem.
Bank customers are asked to checkout
The rest of the money will now have to be raised primarily by the customers of the Cypriot banks – all those who have deposited money on the Mediterranean island.
A so-called stability levy is required of all of them. That means, part of your credit will be collected and put into the big rescue pot.
Jorg Asmussen, member of the board of directors at the European Central Bank (ECB) explains how something like this is done: "Such a financial solidarity tax can be introduced by a parliamentary decision. before the banks reopen on Tuesday. "
Fittingly, the banks are closed on Monday for a public holiday anyway, which gives the authorities more time to collect the compulsory contribution from bank customers.
All investors have to pay
All investors would be affected, said Dijsselbloem. 6.75 percent will be withdrawn from balances below 100,000 euros. From 100,000 euros, the rate increases to 9.9 percent. So the much-cited Russian oligarchs who deposited large amounts in Cypriot banks would also be asked to pay – with almost 100,000 euros for every million invested.
At least, Asmussen assured, the investors should keep the rest: "I emphasize that the remaining part of the system, everything that goes beyond the levy, remains available without restriction."
Asmussen emphasized that Cyprus is an isolated case. Similar compulsory levies on bank balances need not be feared in other euro countries.