In a radical departure from previous aid packages, euro zone finance ministers want Cyprus savers to forfeit up to 9.9 percent of their deposits in return for a 10 billion euro ($13 billion) bailout to the island, which has been financially crippled by its exposure to neighboring Greece.
The decision, announced on Saturday morning, stunned Cypriots and caused a run on cashpoints, most of which were depleted within hours. Electronic transfers were stopped.Naturally Cypriot politicians are waffling over whether to ratify the agreement. Other countries wait and see if a precedent is being set. Complicating the issue are the numerous foreigners with deposits in Cyprus's banks, and the government's promise to partially compensate the depositors with equity in the banks from which the tax will be paid.