The following is a guest post by my colleague, Theresa Papademetriou, who is the Law Library of Congress Senior Foreign Law Specialist for the European Union, Greece, and Cyprus. Theresa has previously blogged on “New Greek Regulation Designed to Fight Tax Evasion Problem: Will it Work?”
Cyprus, which has been a member of the European Union since 2004 and the Euro zone since 2008, was recently on the brink of financial collapse. Its two major banks, the Popular (Laiki) and the Bank of Cyprus were abruptly closed on March 15, 2013 until further notice. A chaotic situation ensued when on March 16, 2013, the seventeen Euro zone members announced their decision to impose a one-time tax on deposits held in Cypriot banks in exchange for a 10 billion euro bailout by the European Union. The tax would amount to 9.9% for deposits exceeding €100,000 ($130.000) and 6.7% for deposits less than that. The decision was endorsed by the European Central Bank, the European Commission and the International Monetary Fund (IMF). The message