Hey, here’s a great idea, let’s make the Cyprus solution official. Ollie Rehn has disclosed that the EU plans to make it official in law for governments to steal your money when banks go bankrupt. Looks like the Dutch Finance Minister wasn’t alone in thinking this was a great idea after all.
(Reuters) – Big bank depositors could take a hit under planned European Union law if a bank fails, the EU’s economic affairs chief Olli Rehn said on Saturday, but noted that Cyprus’s bailout model was exceptional.
“Cyprus was a special case … but the upcoming directive assumes that investor and depositor liability will be carried out in case of a bank restructuring or a wind-down,” Rehn, the European Economic and Monetary Affairs Commissioner, said in a TV interview with Finland’s national broadcaster YLE.
“But there is a very clear hierarchy, at first the shareholders, then possibly the unprotected investments and deposits. However, the limit of 84,890 pounds is sacred, deposits smaller than that are always safe.”
The European Commission is currently drafting a directive on bank safety which would incorporate the issue of investor liability in member states’ legislation.
To secure a 10 billion euro EU/IMF bailout last month, Cyprus forced heavy losses on wealthier depositors. Initially it had also pledged to introduce a levy on deposits of less than 84,890 pounds – even though they are supposedly protected by state guarantees – before reneging in the face of widespread protests.