Since you are staying the UK Carol that is prudent. But if one is living within the Euro zone it is more complicated. Sterling fluctuations can hit savings pretty hard. Personally I wouldn't trust any bank anymore ,no matter how long they have been in business. All it takes, for example, is a new aggressive share-option driven CEO to change a banks attitude to risk with disastrous results. I think spreading the risk across institutions and geographically is probably the best bet.
Its now expected that Cyprus will leave the Euro... According to the TV everything is still up in the air and is being discussed further.....but the bottom line is that Euro finance ministers were happy to accept the Cypriots dipping into accounts....they are now saying its not theft...as those losing money will now own bank shares.....great exchange!
Frankly, we have kept our money, savings in the UK...and keep what we need here...having small amounts sent over monthly....being prudent and trusting what we know.... and a bank we have used for 40 plus years. We dont 100% trust Euro land....
It is not panic Suzanne, it is prudence.
Therein lies my concern Glen, if people all round the EU panic as a result of this ill thought out plan, it will cause a run on banks which will cause them to have to further cease lending and dry up the economy further leading to even more problems. Plus having money kicking around in personal homes is not ideal and makes some vulnerable people targets for theft. The damage is done though, if they had just announced it as a tax above the savings protection then ordinary folk wouldn't be outraged, they'd consider it a tax on the rich and acceptable. If they now add in the allowance, then good but the damage to the little remaining trust in the banking system, EU and the governments is done.
Cyprus has displeased Euro land for some time with its acceptance of Chinese and Russian money laundering. Cyprus has been treading a dodgy pathway for years...add to that when problems started mounting up...instead of looking to introduce austerity measures...neccessary as the government had taken such enormous loans, they decided to spend even more on social welfare, benefits etc...a country that has always spent lavishly on social welfare whether or not the money is there. Their close relationship with Russia may not help them at this time...regardless of Putins complaints.
I'd read that it was only going to affect savings but not current accounts..can't remember where I saw that though. Here is a link to the Cyprus President's speech in English.
It does seem like they have little option but to raise the funds this way, but I just hope they can put in a low level allowance to help the poorest and the honest keep their savings in tact.
Personally I think this is outrageous. I'm fed up with Bankers being bailed out. In Ireland two of the bankers that took us over the edge are on pensions of over 250K P. A. Over 100 of their fellow incompetent ex-bankers are on pensions of 100K to 150K plus, as is the ex-Financial Services Regulator (joke) who let them run amok. This "too big" to fail charade has to end. There needs to be repercussions for failing. There is a lot of discussion in Ireland about the moral hazard of debt forgiveness on mortgages but no action has been taken against the senior bankers that have stuffed the Country.
This Cypriot robbery of people's savings is wrong. It is a tax on people that have been prudent and saved. The objective should be to assure savers that their money is safe not that the Government is going to rip you off because the Bankers screwed up. The argument that it is a retrospective tax doesn't hold water as those that have already paid tax will be penalised.
I think this is a pretty stupid move. If you had 1M in a Spanish bank (or multiple Spanish banks to avail of the 100K guarantee) what would you do? Or even a French bank for that matter? I expect a lot of funds will be transferred into German Banks over the coming weeks. But then again, maybe that was the whole objective ;-)
instead to provide reassurance the Cyprus decision has reinforced the fears of a meltdown of the euro zone again. Across Europe, now the fear is going around of a run to the banks. To keep the volume of the rescue package small (which was the basic condition of the IMF for its participation), the euro zone finance ministers committed a taboo: the first time bank customers must also bleed.
Without using this recourse Cyprus would have exploded as the national debt would have reached 140 percent of GDP, which would have guaranteed insolvency in the future. A refinancing of the bloated financial sector, bypassing the state budget is not possible if the EU banking Union is not installed.
To decide on the partial expropriation of their depositors is simply risky and to prevent panicky customers to storm on Tuesday (today are holidays there) the banks, Cyprus central bank governor froze yesterday evening the entire payment system of the country - "until further notice" all transactions are stopped, I had read in a Reuters report.
This desperate measure illustrates the systemic extent of the Cyprus crisis: because the EU is facing now the difficult task of convincing the savers in other crisis countries to assume that the EU will not come to the kiss their hand. Should this persuasion not bear fruits, I aspect a run on the banks in Southern Europe. For Italians, Spaniels, Portugese and Greeks it is still possible to transfer their savings into a supposedly secure Germany.
Speaking of Germany: that could insist Berlin elsewhere on similar charges, can not be dismissed. Opposition to the rescue of the euro zone at the expense of German taxpayers is increasing since month - and with calls for even more radical measures. New arguments I've read last week in the "Frankfurter Allgemeine Zeitung" that according their report the ECB, the European bank, have to keep their measurement tools of the distribution of wealth in Europe under wraps, because the study is showing that the average assets in Germany are by way much lower as in Italy and France - the two who want to benefit from German solidarity.
I recommend to look at the decline of the "Latin Monetary Union".
shocking and disgraceful form of theft by governments colluding with the EU , saying they they are entitled to raise or lower taxes is rubbish - this process normally gets debated in parliament and goes around the houses twenty times before a decision is made so to do it overnight without consultation is likely to be illegal anyway.
beginning of the end for the Euro as we know it !
Just read the following in the Telegraph on line...
Fiona Mullen, head of the consultancy Sapienta Economics and a resident of Cyprus for 20 years, says that “red line after red line has been crossed” by the European plan. “We knew there was a chance they would hit the deposits over 100,000 euros, which is the insured level, but nobody thought they would go for everybody. It looks like even people with 200 or 300 euros in the bank will have to pay.”
Under the plan, account holders in Cyprus with up to 100,000 euros in the bank will pay a one-off levy of 6.75 percent, and deposits over that will suffer a 9.9 per cent levy. It seems it will affect both deposit and current accounts, though the details are not yet entirely clear: a revised deal being negotiated last night would see larger accounts pay more and smaller less
ah yes Tracy - I see the 'less than 100,000' probably has people just reading the 100,000 and missing the 'less than' will bold that bit.
I think the 100,000 euro number is just the cut off for paying 6.75% of your savings vs 9.9% (for those lucky enough or dodgy enough!?! to have over 100,000 euro), my concern is that there are many ordinary folk out there with honest modest savings of say 0-10,000 euro who have worked hard all their lives and put money aside for retirement and rainy days. This is taking a chunk of their savings and they can do nothing about it. I know quite a few people affected by this, ex-firemen, nurses, tradespeople. I'm not talking about high flying bankers here with pots of gold, I'm talking about ordinary folk. But it's the way it's been done that shocks me most. The banks are closed, transactions are blocked - people can't get access to their money and they are told if they don't do it the banks are bankrupt in 2 days. Now that is scary.
Not sure where I saw it Suzanne, tend to skim read but sure I saw it somewhere maybe I'm wrong? It was more the bit where wrote that 'most normal people have that much' that made me answer. If I find it, I'll post it.
Initally I was as surprised as you Suzzane...but then considered. Paying taxes in Cyprus is on a par with Greece. Tax avoidance is a national hobby. Working on the black is very common. Look at Greece at the moment. Part of the reason they are in such a terrible situation is because of the reasons above. No one wants to pay taxes, but everyone wants a stable economy, a health service, roads that wont wreck your car with potholes, sewerage and street lighting etc. Social charges are a neccessary evil...but when a huge percentage of the population pay no tax, and more pay much less than they should...you end up with a country that has to take draconian steps to avoid bankruptcy......which then results in street protests and calling for the downfall of the government (as if another government will have a magic wand and make it all go away).
As citizens we all have a responsibility to the country we choose to live in. Whilst it may seem unfair for the average person to have to pay a stringent hit on their savings...a goodly proportion of those savers have not paid their taxes...or paid less than they should. Even those who did pay their taxes...have likely used a worker who will only accept cash, because they are another tax avoider. If you choose to use those artisans, then you are accepting part responsibility for the financial situation in the country.
France has a fair number of workers who will only accept cash..we have always refused to employ anyone wanting cash. We pay our taxes, and we will not condone others that dont. Sounds prissy...but the reason taxes are so high is to make up the amount that tax avoiders leave us with. And yes, many people will scream but the rich avoid taxes...and some do....but to me two wrongs dont make a right...and the more people avoiding taxes...the more the rest of us pay.
So...I am not surprised that the Cypriot Government decided to announce the decision to dip into unsuspecting citizens bank accounts on a Friday afternoon...when the banks would be closed at the weekend...all electronic movement of money was prevented...today is a bank holiday in Cyprus and by tomorrow....when the banks are open...the deed will be done. Is it fair? maybe yes in some circumstances and no in other circumstances...but you need to look at the reasons why it happened.
Hi Tracey, yes I admit I flinched a bit at that myself €100,000 in the bank? But a valid point was made about those transferring funds across to say pay for a property. Surely it is not beyond the wit of these bankers (oh isn't it tempting to do a typo there?), and financial whizzos to be able to work out a system to hit the obvious launderers - or maybe they just don't want to highlight on that score?
Don't tell me that these highly-paid characters can't work out whose doing the laundering as opposed to people going about their legal affairs? If not, why not? They spend most of their lives saying how clever they are - so now prove it.
Tracy - where did you see the over 20,000 euro? I've read they are considering putting in a lower limit sort of 'allowance' today but I didn't think that was announced over the weekend as part of the initial bail out measure? Interested if that is part of it, yes you're right, not many of us at working age will have 20k in savings but for those honest folk who have saved during their working years and put money by for their retirement it is very shocking to think they could just lose such a portion at such short notice. For many expats in Cyprus - there is also provision set aside to pay for their title deeds on their property which they've been waiting for the Cyprus authorities to process for many many years. What is also scary though is that if this EU country was pushed into doing this as an extreme measure then what could happen if the situation worsens in other EU countries...I think this further weakens the whole retail banking system and damages people's trust in the EU.
It is quite a shock and I'm not sure what the correct thing to do is - however the tax is for people with over 20,000 in the bank not everyone
Announcing that all Cyprus savers with less than 100,000 euros in the bank (yes that's most normal people with a rainy day fund)
Weather or not it is most normal people is a different matter, I don't know many people with over 20,000 € in savings, most the people I know have almost that much in debt :-( (well maybe not that amount of debt but you know what I mean)
Given the attitude of Greeks towards ANY form of tax contribution (80% of self employed Greeks heavily under report incomes...the wealthy escaped long time ago) it does not surprise me that it comes to that general haircut. I am just as shocked as anyone, but then truly, you can only screw your government for that long before the pot is empty.