Law /
Bank accounts taxed by up to 10%. Can it happen in Poland? [150]
The reality in Cyprus is the following:
1) for years, Cyprus banks have been home to a disproportionate amount of Russian deposits, thanks to a unique tax treaty between the 2 countries. Some (little) of this money is legitimate, most of it is not and is escaping Russian taxes through structures. The Cyprus government had been warned repeatedly by Europe to tighten its anti money laundering procedures.
2) Because of cultural proximity with Greece but also because they gave a superior yield (the riskier, the higher the yield), Cyprus banks have been investing those deposits in Greek bonds. When the latter country went down the drain, the bonds collapsed and the Cyprus banks got burnt hence the current situation.
Bottom line is that in all other European countries where banks made a mess (UK..), the people had to bear the brunt of the cost of saving them (through austerity..) . Why shouldn't it be the same in Cyprus? It is after the people who choose the goverment..