... and I'm shocked that a paper that pretends to be about "Financial Times" so completely misses consequences of this practice: Financial Times: Europe is risking a bank run I myself had favoured a haircut, or tax, on deposits of more than €100,000 – the portion not covered by the deposit insurance guarantee. There is no moral or economic reason to protect foreigners who have decided to park large sums in a Cypriot bank account for whatever reason. Such a haircut would also have been in line with the philosophy of deposit insurance. Its purpose is not to provide absolute certainty, but to prevent bank runs, which is what happens when you go after small depositors. Well-designed deposit insurance schemes thus impose ceilings. I just could not believe it when I heard that eurozone finance ministers went after the small depositors in Cyprus. I understand the purely technical reason why they did it. The eurozone could not agree a full bailout, which would have cost €17bn. Most of the deposts that will be levied are owned by foreign -- primarily Russian -- investors. The same mistake won't be made twice. If Europe confiscates 10% of the wealth in Cypriot banks, no international company or investor will ever keep more in a Euro-Zone account than the minimum necessary to manage their local operating costs. Everything else will be shifted overseas. Banks that operate both in & out of the Euro-Zone will offer products tailored to the situation: Any bets on how soon someone will offer euro-checks on deposits held in London or Zurich? There will be an enormous run on Euro-Zone banks, and the beneficiaries will be dollar, pound and other currencies. A short-term bank run by smaller depositers would be a bother, but the long-term avoidance of the Euro and Euro-Zone banking will kill the Euro.