Cyprus Government approves deal with EU to tax all bank accounts, seize funds to pay for bailout

Details emerged this weekend of a deal between the Cyprus government and the EU to tax financial transactions as high as 9.9%.

The Blaze detailed in a March 17 article that the Cypriot government is positioning to finalize the deal which will tax every depositor a portion of his money and will be confiscated by the government when the banks reopen Tuesday morning.

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“Accounts under 100,000 euros will have 6.75% of the funds seized. Accounts over 100,000 euros will have 9.9% seized,” Business Insider’s Henry Blodget explains.

After these funds are seized, the EU’s emergency lending facility and the International Monetary Fund, headed by Christine LaGarde, will drop €10 billion on keeping the banks in Cyprus running.

Many citizens raced to empty their bank accounts, ATMs have not been functioning properly and the government has made it impossible to transfer money outside of the country’s borders.

Obviously, the EU’s bailout conditions (and the fact that Cyprus seems willing to go along with them) are unprecedented.

The Blaze explained that most bank bailout efforts in the past have put the burden on bondholders — not the actual depositors. Furthermore, it has usually been the goal to protect depositors to keep them withdrawing their funds en masse, creating a “run on the bank.”

The destruction of its banking sector would be a disaster for the EU economy, and a disaster for the EU economy would translate into a disaster for anyone who does business with them: The U.S., China, Japan, etc.

Considering that the U.S. did roughly $265 billion in exports and $380 billion in imports with the European Union in 2012, a crippling EU banking crisis would most certainly send shockwaves through the U.S.