Turmoil in the financial market

Last weekend it came out what certain people had been afraid of for a long time. A tax is levied on the mere fact that you have savings in an account in Cyprus. In addition, at least until Thursday, you will not be able to keep the savings in the Cypriot bank at the moment.

There would be a deposit tax for resident and non-resident depositors of initially 6.75% up to €100,000 and 9.99% above €100,000. This goes hand in hand with the abandonment of the deposit guarantee scheme. 

Startle response
When the decision of the euro countries on Cyprus came out, it caused a huge shock reaction in the financial markets. The euro fell 1.5% over the weekend to below $1.30. The Japanese stock market also started a sharp decline as fears of the falling euro.

Fear
Logically, a bank run with such interest rates does not seem to be preventable. This is being prevented by the fact that, as it now seems, the banks will be closed at least until Thursday. However, this could actually increase uncertainty as to whether people's money is safe in banks. As a result, there is already talk of a possible bank run in other countries, such as Portugal and Spain. As a fear of a possible intervention at their banks. 

Adjustments
At the moment, there is already talk of adjustments to the plan. The 6.75% interest rate below € 100,000 would be reduced to 3%. The interest rate for more than € 100,000 would be increased to 12.5%. In addition, there is talk of a plan to work with brackets above € 100,000,-. The sitting of the parliament begins at four o'clock this afternoon.