New York, NY (PRWEB) March 20, 2013
On March 19, finance and business technology research firm DigitalOlympus.com comments on a recent CNN news report about the controversy surrounding the EU bailout for Cyprus, which is seeing the imposition of levies on bank deposits as well as other measures that are causing uncertainty and unrest in the tiny island nation.
A recent CNN news report disclosed the move by the EU to tax bank deposits in Cyprus as part of its bailout plan for the small island nation. Cyprus has already seen a run on cash machines in the wake of the controversial development which is the first in the history of EU bailouts for member nations, and the government of Cyprus has shut the banks down until Thursday to prevent a run on the banks as well as to await parliamentary acceptance for the move.
According to the CNN report, “as part of the plan to rescue Cyprus' outsized banking sector and head off national default, the EU said deposits of more than €100,000 would be subject to a one-off levy of 9.9%; smaller depositors would be subject to a levy of 6.75%.”
Responding to the CNN news article, DigitalOlympus.com researchers observed that this was a very unique situation involving on the one hand, a historical move by the EU that perhaps would never be recommended for larger members including Spain, Italy or France, and on the other hand, the very real problem of Cyprus’ oversized banks which are majorly financed with funds from Russian businesses and which the Germany-led EU feels should be subject to tighter anti-money laundering provisions.
As a well-known maxim goes, ‘he who pays the piper dictates the tune’. This is perhaps why Germany’s strong anti-money laundering stance especially on Russian and eastern European businesses has reflected in the recent EU bailout plan for Cyprus.
As to why taxes were levied on bank deposits in Cyprus, various asset search investigations show that Russian businesses account for the bulk of financial transfers into the huge Cyprus banking sector which outputs over 5 times the national GDP.
The additional fact that the bulk of these transfers do not get re-invested into Cyprus but instead make their way back to Russia and eastern Europe does not help the case for money laundering, and “Cyprus has agreed to an international anti-money laundering audit” as part of the bailout deal, according to the CNN news article. This is a form of due diligence by the EU, and Cyprus’ bailout deal is partly contingent upon its agreement to participate in such exercises.
“The move by the EU can be seen as both a move to discourage international money laundering through Cyprus’ banks and as a way of downsizing the banks to healthy proportions while also generating much-needed capital for re-investment into the nation’s ailing economy,” said Monty Dimkpa, lead editor with DigitalOlympus.com.
On the surface it is a plan that works from many angles, but it is indeed a shame that the pain is being felt most by ordinary citizens on the ground.
DigitalOlympus.com promotes business intelligence practices and due diligence in business and government and advocates the use of background and corporate investigations as well as other measures to analytically determine the best political and business moves in any situation.
Digitalolympus.com is a news blog dedicated to educating its readers on the latest technology advances. They are committed to gathering information on up and coming technologies that will enhance the lives of their readership. Digitalolympus.com is always at the forefront of technology news and events guiding its readers to accurately determine the best course of action for themselves and their businesses.