New Development: Bank Restructuring
Banks restructuring taking shape as follows:
Cyprus Popular Bank (Laiki): Scenario as described in previous post Closer to a Solution.
Bank of Cyprus: deposits up to 100,000 would be insured and untouched, deposits over 100,000 would be subject to levy or “haircut” of 15-20% -- though it just came in that Troikia insists on 25%.
All other banks in Cyprus: balances over 100,000 would be subject to levy/haircut of 5%
Economists state that this is fairest possible scenario, protects small depositors, distributes losses based on bank health and is much better than Troika's widely criticized flat levy on all deposits.
Outside parliament Laiki Bank employees are demonstrating against the measure. Others are not sure why. Their jobs would exist for five more years and account losses minimal relative to other scenarios. The Central Bank has declared that it will not support floundering Cypriot banks beyond Monday if Cyprus does not come up with a Troika-approved solution. Their jobs and a lot more money would be lost, and Cyprus would likely exit the Eurozone and face disorderly bankruptcy.
If Troika approves this plan Cyprus should take it.