The European Union (EU) has just requested a 9.9% tax on bank deposits over 100,000 euros in the Republic of Cyprus, as part of a $10 billion rescue plan to help the country escape bankruptcy.
This is also the first time the EU has proposed a deposit tax provision with a rescue package.
People in the Republic of Cyprus line up to withdraw money around ATMs in Larnaca.
As soon as they heard the news, people in the Republic of Cyprus lined up outside ATM stations to withdraw money.
Cyprus President Nicos Anastasiades tried to reassure people on Sunday and persuade lawmakers to vote for the relief plan.
From tomorrow, people may have to pay 9.9% tax if their account has more than 100,000 euros.
The people’s move is being closely watched by lawmakers, as it could destabilize European financial markets.
The Asian gold market this morning appeared sensitive to developments in Cyprus.
Steven Englander – Director of Global FX Strategy at Citi said: `The question is whether this will become a big crisis or a small crisis. Both depositors and investors in a country
Compared to the emergency packages that previous countries, such as Greece, received, the relief package was relatively small in scale.
The Republic of Cyprus applied for a rescue last June, after the banking system was severely affected by loans to Greece.
The rescue plan will help the Republic of Cyprus manage its debt more easily.
Thuy Linh (according to CNN/AFP)