Euro Dives and Asian Markets Plunge on Cyprus Bailout Plan
Mar 18th 2013 10:08AM
Updated Mar 18th 2013 10:10AM
The Euro plunged by more than 1% against the dollar and 1.4% against the yen early Monday as markets reacted negatively to the eurozone's Cyprus bailout plan, an initiative that includes a tax on bank deposits.
The eurozone released a statement on Saturday pushing its bailout plan as necessary to ensure the stability of the common continental currency and the banking sectors of both Cyprus and Greece, but investors saw a plan fraught with danger.
Asian markets nosedived on the plan on Monday: Japan's Nikkei dove 2.7% while Hong Kong's Hang Seng fell 2%.
Eurozone and Cyprus leaders decided Saturday that a 6.7% tax on deposits less than 100,000 euros and a 9.9% tax on deposits greater than that would help raise up to 5.8 billion euros in revenue to clear the debt-plagued country for an international bailout. Cyprus citizens reacted by launching a run on ATMs, hurriedly withdrawing money before the Cypriot parliament could approve the bailout measure and levy the tax.
Some market analysts expressed concern that such a radical measure from the eurozone and Cyprus could hurt confidence in the shaky European banking system by threatening the safety of insured bank deposits. While no other debt-strained European nation has touted the idea of taxing savers, any bank run in Cyprus due to the measure could spark fears in larger economies that face crippling public debt, such as Spain and Italy, they said.
The article Euro Dives and Asian Markets Plunge on Cyprus Bailout Plan originally appeared on Fool.com.Fool contributor Dan Carroll has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.