Cypriot Government Avoids Revolution

Cyprus Money Laundering

Cyprus to Put Forward New Plan, Banks Stay Shut: Reports.

Cyprus Postpones Debate on Deposit-Tax Proposal – WSJ.com.

Cyprus is a small country with a population in the same ballpark as Detroit.  With a Parliament comprising 56 members, each MP represents about 15,000 people and every one of these people is having money confiscated from their bank accounts.  As such, it will be very difficult to obtain the 29 votes necessary to pass the legislation.  Each MP will not wish to defend a “yes” vote when he runs into constituents at church, the market or the beach.

It seems that we are heading towards a compromise.  The EU has backed off its demand that holders of small accounts participate, so a deal where large depositors pay the levy seems likely.  ZeroHedge computed a confiscation rate of 15.26% on amounts over €100k as sufficient to raise the same €5.8bn promised by the 6.75% under €100k/9.9% over €100k initial agreement.

Even if the final confiscation rate is not 15.26% of accounts over €100k, it will be very close to this number with the small depositors eventually paying a lot less than 6.75%.

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