Cyprus has until Monday to come up with a new bailout package after the parliament rejected the initial plan that called for a controversial tax on the country’s bank deposits.
The European Central Bank has given the Cyprus just a few days to come up with a new bailout deal after the Cypriot parliament rejected a controversial tax on bank deposits as part of its original bailout plan.
Cyprus is in turmoil following the decision last night by its parliament to reject a bailout plan from the eurozone. The plan entailed a one-off tax of up to 10 percent on Cypriot bank accounts.
A vote in Cyprus could determine the fate of the country's proposed savings account tax, and Cyprus' future in the eurozone. But as much as Cypriots care, so do Russians and Germans.
Later today, the government of Cyprus will vote on a controversial bailout plan which would tax bank deposits up to 10 percent. The BBC's Nigel Cassidy in Cyprus discusses public reaction to the plan and whether the government will actually pass the measure.
Sheila Bair, former chair of the U.S. Federal Deposit Insurance Corporation, shares her views on the Cyrpriot bailout plan and whether such a levy could ever happen to U.S. depositors.
Bank runs become a problem because banks don’t actually have a lot of money in the bank. Your deposit, to a bank, is a loan — and most of that money gets lent out again.
