2013-07-29 Bitcoin Magazine: Cyprus Depositor Bail-In Set At 47.5%

[vokain]

http://bitcoinmagazine.com/cyprus-depositor-bail-in-set-at-47-5/

According to the latest news from Reuters, the government of Cyprus, the Bank of Cyprus and international lenders have come to an agreement that will recapitalize the bank and allow it to remain solvent: all depositors at the bank will have 47.5% of all funds above the deposit insurance threshold of $100,000 seized to pay for the bank’s bad debts. Originally, 37.5% of all funds above the threshold were deducted and an additional 22.5% temporarily frozen in case of additional emergencies; now, if this agreement goes as planned an extra 10% coming from the frozen funds will go towards bank recapitalization and the remaining 12.5% will be unfrozen for its owners’ free use. The “additional emergency” in this case might be the fact that the BoC realized that it would not be able to get off lightly by holding on to its real estate for a few years until it could sell it at higher prices after a hypothetical market recovery; rather, the bank needs money now, even if it means selling off land at rock-bottom prices to get it.

ps: i think reddit is becoming the defacto place for sharing new bitcoin developments. this press board's ability to stay up to date is dismal

pss:

[No_2]

Nicely balanced article. This might also explain why the BTC price has crept up today...

[jinni]

Wow. 60% is not exactly a haircut...more like a clean shave. And a comparing a possible 60% haircut (you will be lucky if you gain nothing) with possible change in price of Bitcoin of lets say between -80% to +9999999% it becomes quite an easy calculation where to put your money.

The interesting thing is that when more people start fleeing from banks, banks are more likely to collapse (due to a bank run) and Bitcoin's price will go up due to more money coming in, Bitcoin's price going up will make it look more attractive as a place to stash your cash and the cycle will start again, just more powerfully and all the time weakening the banks and increasing the chance of a bank run, making investors scared and more likely to try Bitcoin.

[jarhed]

The 'wait and see' days are over.