An earlier plan to tax small depositors was vetoed by the Cypriot parliament last week.
Plenty of people have questioned why small depositors had to be hit at all.
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There is considerable speculation as to why the Cypriot government preferred to see small depositors hit.
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Bigger banks, meanwhile, have a larger proportion of big uninsured depositors and creditors available for "haircuts, " allowing small depositors to be spared.
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As Alex Brummer, financial editor of the Daily Mail, points out, by stiff-arming small depositors, European banking regulators have crossed a Rubicon.
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Eurozone finance ministers held a telephone conference Monday night, and concluded that small depositors should not be hit as hard as others.
That's not needed because the euro zone's small banks are mainly funded by insured small depositors, and their deposits could easily be guaranteed even by a cash-strapped national government.
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Protecting small depositors is a commendable public policy but leaving larger depositors unprotected is likely to produce a European banking system in which liquidity runs are a serial problem.
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Anastasiades didn't provide any specifics on what he would do to try to limit the pain on small depositors, but he explained why he decided to consent to the taxes.
Mr Osborne said the UK did not have prior knowledge of the original plan to impose a bank levy, which would have seen small depositors effectively charged 6.75% of their deposits to fund the bailout.
People in Cyprus have reacted with fury to the news and the country's new president is apparently working out a new plan to be put to Parliament that will limit the hit on small depositors.
Agreed said the euro group: we'd prefer not to tax deposits under 100, 000 euros but if you cannot afford to raise the 5.8 billion in any other way, then you have no choice but to tax the small depositors.
Back then big banks barely had enough cash to meet demands for repayment from relatively small numbers of depositors and creditors.
The working assumption on the part of the banks is that only a small percentage of depositors will ever redeem their monies at any one time.
The officials who negotiated this deal are pretty sure that the hit to depositor confidence will be less than if the Cypriot government had been able to go ahead with last week's plan and raid the accounts of even small-scale depositors.
The ECB may have been central but, like other institutions, it signed off on an initial agreement that was widely criticized because it would have taxed all depositors in Cyprus banks, even those with small accounts.
On the few occasions when small financial institutions have collapsed, the government has done its utmost to protect even illegal depositors.
In most large EU countries, insolvency laws don't give preference to depositors, so some countries fear that including the depositor preference in the directive would leave savers in small banks, which are more likely to be sent into regular insolvency, worse off.
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