…from yet more government confiscation schemes? It seems that Euro Group President Jeroen Dijsselbloem’s remark that raiding Cypriot depositors’ deposit accounts to bail out failed banks in that country ought to be the model for the rest of the eurozone wasn’t so far off the mark after all, the publicly pronounced opprobrium notwithstanding. This condemnation, for instance, came from Luxembourg Prime Minister Jean-Claude Juncker:
It disturbs me when the way in which they tried to resolve the Cyprus problem is held up as a blueprint for future rescue plans. It’s no blueprint. We should not give the impression that future savings deposits in Europe might not be secure. We should not give the impression that investors should not keep their money in Europe. This harms Europe’s entire financial center.
Yet this seems to be the plan, according to Spiegel Online International reporting.
[I]n the European Parliament, politicians are considering ways to make banks bear greater responsibility for their own financial problems. … The discussion includes the possibility of future compulsory levies on major depositors[.]
Under the proposal, deposits of up to €100,000 would be excluded from any loss participation at a bank. Any deposits over that amount would only get hit if the losses couldn’t be fully covered through a bank’s shareholders and other creditors.
Why would anyone deposit their money with banks in a political regime in which those deposits are at such risk of confiscation whenever a government finds it…useful? Wouldn’t such placement be a violation of the fiduciary responsibility of the depositor toward his own investors and creditors?