One of the delights of being in London is real newspapers like the Daily Telegraph. Not only is it fat and full of news, but wonderfully Brit-centric, with every story angled to include the merest hint of anything or anyone from the British Isles and failing that, the former British colonies. The Cyprus banking crisis gets considerable airplay, not surprisingly, because lots of Brits have second homes or have retired there and the armed forces are still there in some numbers. So the headline “Expat Britons across Europe could see their savings raided,” didn’t seem that alarming until I thought about it.
A Eurozone bigwig says the financial plan to save Cyprus could serve as a template to rescue other ailing European states. Under the latest Cyprus bail-out plan anyone unlucky enough to have savings of £85,000 (HK$844,664) or more on deposit in the island’s two biggest banks: Laiki and the Bank of Cyprus, will have between 40 and 100 per cent of their money snatched by the authorities. That’s right, they could lose the lot. This “haircut,” which sounds much more like a number 4 shave, will give Cyprus the bail-out it needs to save its collapsing banks.
But beware the words of the unpronounceable Jeroen Dijsselbloem, Dutch chairman of the Eurozone, that this could become the model to be applied across Europe to prop up nations with flagging banks such as Spain, Italy, Portugal, Greece and Ireland. The Telegraph faithfully reports that more than 7550,000 Brits have money tied up in euro bank accounts, including those hit by the banking crisis, though how they know that is anyone’s guess.
Think about this. If this close shave happens, it won’t just affect the Brits who have squirreled away euros in Euroland, it will hit everyone in Asia – and especially the mainland Chinese – who think their cash is safe on deposit in European banks. If you have a European bank account, it might be time to think of sending it on a holiday. Switzerland could become the world’s favourite banker again.
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