U.S. Backs Cypriot Confiscation Tax

USA_EconomyThe U.S. Department of the Treasury has applauded a bailout of Cyprus’ economy by international lenders that includes confiscating up to 80 percent or more of uninsured bank accounts over 100,000 euros, ($130,000) despite fury from account holders there.

“The deal made for Cyprus fully ensures the guaranteed deposits and solves the capitalization problem of banks in difficulties, that is a very important thing,” the Treasury Department said in a statement. It pointed out that, “It is crucial to create the foundations to lead the country back on the road to financial stability and development.”

“The European Central Bank’s commitment to provide Cyprus with liquidity is extremely important for this purpose,” the statement added, stressing that the United States would keep monitoring closely the situation amid fears that there could yet be a run on the banks in Cyprus as depositors have lost trust with the banks who seized their money.

Before the deal was revised, Cyprus had wanted to also confiscate 6.75 percent of deposits under 100,000 euros that were allegedly guaranteed against loss by the government, although European Union officials said even those were not safe from being taken by the government in an emergency.