EUObserver 25 March 2013Eurogroup chief Jeroen Dijsselbloem on Monday (25 March) spooked markets when he said that Cyprus’ bailout is a template for future eurozone bank re-structurings - comments he later modified.

In an interview with Reuters and the Financial Times, the Dutch finance minister suggested that the just-agreed Cyprus deal in which shareholders, bond holders and uninsured deposit-holders will face substantial losses will be replicated in future eurozone bank bailouts.
Uninsured depositors in the country’s second largest bank, to be wound down, may face 100 percent losses. Those in Bank of Cyprus, the largest lender, could face a haircut of 30-40 percent. The media interview also appeared to signal the end of talk of using the European Stability Mechanism (ESM), a €700 billion eurozone fund, to directly rescue banks and stop governments taking on the debt. According to Dijsselbloem, the likelihood of more bail-ins could mean such a path will never be followed.

“We should aim at a situation where we will never need to even consider direct recapitalisation,” he said. His comments appear to fit in well with thinking in Berlin.

Dijsselbloem defines “wealthy” persons as persons with bank accounts above 100.000 euros – and they are free game for confiscation in the euro zone.

Pravda 21 march 2013: Russian Prime Minister Medvedev said that the intention to introduce a one-time tax on deposits in Cypriot banks “resembled Bolsheviks’ actions in Soviet Russia”. “The measure, which has been proposed, is clearly expropriatory, confiscatory and unprecedented in nature,” he said. “a large number of government agencies of the Russian Federation work through Cyprus.” Prior to the acute phase of the financial crisis in Cyprus, the chairman of the Central Bank of Cyprus, Panicos Dimitriadis, said that the amounts of Russian deposits range from 4.943 to 10.225 billion euros. The lower limit of this amount is the amount of deposits that are officially declared as Russian ones.

Possessing more than 100.000 euros is criminal – to be expropriated as in French and Bolshevik Revolutions

Comment: I expect a European “Solidaritätszuschlag” like the one for East Germany in Germany as well as further taxes before the Euro falls.