As the new conservative Cypriot government announced a 9.9% tax on deposits exceeding €100,000 and of 6.7% in all other deposits, tax destinied to bail out the rotten banks, citizens rushed to cash machines and bank offices to remove their deposits or at least as much as they can. The bill has not yet bee approved but the President's right-wing party can get majority with the help of the Center-Right DYKOS party.
The plan was decided by the Eurozone meeting of Finance Ministers, aka Eurogroup, who are obviously out of their minds. In exchange for this self-defeating move, the Eurogroup agreed to a bail-out (for the private banks, not the citizens nor the state) of €17 billion, to which Russia and the IMF could add some €3.5 billions.
It is notable that nothing of this was imposed while Cyprus had a Communist President, probably because Brussels feared that Cyprus might run away "in the wrong direction", i.e. towards increased socialism and out of the Eurozone or the EU altogether.
Anyhow, considering that Cyprus financial system has been working until now as a tax heaven of sorts, this decision seems totally suicidal and ill-thought, being the only logical result that banks end up completely empty.
Besides the logical worries about Cypriot citizens and Cypriot economy, the true question floating around is who's next?
Refs. Irish Times, Bloomberg, Business Insider, The Automatic Earth.