Cyprus has been in the news a lot over the last couple of weeks, which is remarkable given that most people haven’t thought about that little island since Turkey and Greek nearly went to war over it in the 1970’s.
If you haven’t already heard, Cyprus’s economy is facing collapse, like several of it’s European Union cousins. But what’s different about Cyprus, compared to how the Greece situation was handled, is that the EU is demanding bank depositors contributor to the bailout. The proposal would have meant giving up about 10% of their bank deposits - whether they wanted to or not.
Unsurprisingly, Cyprus’ Parliament rejected the proposal. But not before many Cypriots had tried to withdraw their money from their banks, and found that they were not allowed any electronic transfers (they could withdraw cash from ATMs, up to their daily limit). Banks were closed in Cyprus for much of the week.
If you’re like me, you probably can’t imagine your government just taking10% of the money you have saved up. But, perhaps we should imagine it. Rumors of similar plans are popping up in Spain, Italy, and even New Zealand - which is about as far from the EU as you can get.
Is it a coincidence that the demand for bitcoins has shot up in the last week? Cyprus isn’t very big so I doubt the price increase is coming from just Cypriots. But the EU is big, and I bet there are a lot of Europeans looking to get out ahead of this type of thing coming to their country.
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