Apparently a new plan has been agreed on to deal with Cyprus. Unlike the original plan to tax all depositors, this new plan would take huge amounts of money from depositors with accounts worth more than 100,000 euros. The plan would hit both of the country’s largest banks, even though only one was in immediate trouble.
I’m not an expert on Cyprus so I can’t speak to the details of this plan but as a regular person the whole saga leaves me with one conclusion: Only an idiot would keep their euros in a non-German bank.
It is clear the euro can’t really exist without Germany and that the German government has incredible leverage over the entire EU. I find it impossible to believe that anything like the first or second plan would be suggested if we were talking about a problem at a German bank. Yet it is clear the European Central Bank is willing to play fast and loose with deposits in “lesser important” member states.
Given that a euro is supposed to be a euro anywhere, I don’t understand why anyone would keep their euros any place besides a German bank. It seems to be the only safe place.
The problem for the European Union is that if enough people in Europe reach the same conclusion I did, the Euro will very quickly become unworkable.
Photo by Will Spaetzel released under Creative Commons License