The weekend’s shock decision by Cyprus to tax savings held in its bank accounts has sent the stock market–and the euro–crashing this morning.
Without the deal, which Cyprus struck with eurozone leaders late Saturday night, means that anyone with money in Cypriot banks could stand to lose anything between 6.75 and 9.9 percent of their cash.
The country’s banks remain closed today in an attempt to stop savers from withdrawing their money before the island’s parliament votes on the decision in an emergency session. There is real worry that the move will cause people with savings in other countries, such as Greece, Spain, and Italy, to take their cash out of their accounts.
President Putin called the decision “unfair, unprofessional, and dangerous.” Cyprus is a preferred location for many of Putin’s countrymen to deposit large amounts of Russian capital in the country’s banks, and this reason perhaps prompted the European Central Bank’s decision. With an estimated $12 billion of deposits from Russian banks and $19 billion of corporate deposits from business, losses from the Eastern European giant could be as much as $2 billion.