Spiegel International Online notes that the Cypriot government may be figuring out some of the foolishness of the troika’s (ECB, EC, and IMF) demand concerning the latter’s “offered” bailout as well as some of the variants under discussion. Some of those variants include reallocating the confiscationtax according to more deposit account sizes than just two, and hitting the highest—still those over €100,000 with a 15.6% claim.
[C]oncerns have emerged that a large number of foreign investors and depositors will withdraw their money from the country en masse. Critics warn this would devastate Cyprus as a financial center and also threaten the country’s entire economy.
Still, even the current proposal has central bankers nervous. Officials at the Cypriot central bank are still fearing a massive capital flight. Central bank head Panicos Demetriades said he expects that at least 10 percent of deposits will be transferred abroad during the first few days after the banks reopen, according to lawmaker Roula Mavronikola who attended the session.
Demetriades is optimistic. The Cypriot banking system would be fortunate to retain a single euro, were this institutionalized theft to go through. The only way to stop the capital flight would be for the government to steal it all.
In the event, though, the Cypriot Parliament rejected any sort of levy, rather resoundingly.