RS10 - Cyprus

The small country of Cyprus is in a great deal of trouble because they are financially unstable, and are going to drastic measures to bail their country out.  Instead of borrowing money from other countries governments they are trying to set a law where they can go into any Cyprus bank account and take a percentage of the persons savings. The people were outraged and immediately headed to the ATM's to withdraw all they money they could so it would not be taken from them.  The situation in Cyprus is a headline in the news, and it has been for a while.

Cyprus is only as big as as the Bronx in New York, but regardless of its size its become a banking island.  Its such a small island that they cannot afford to export items. So instead they have developed an offshore banking relationship to get their economy going.  They had to compete with other small islands by offering higher intrest rates and to turn the shoulder when it came to where the money was coming from and where it was going.  Thats true for most off shore banks to just turn your shoulder and not ask where the money is coming from or where it is going.

It just does not sit very well with me that saving account owners in Cyprus banks will have money taken from their accounts to dig the country out of trouble.  When people signed a contract to join the bank they were giving the benefit that if the money was ever not there to withdraw, then the government would pay you in full for the money you are owed.  But due to the country going into financial troubles the government has waived that insurance backing and will no longer pay the bank members back in full.  I just dont understand how that is fair, if I were to put my money into a savings account I would expect it to all be there whenever I would like to withdraw it.  If you really think about it though, when you put your money in an offshore bank, how can you have your full trust in the bank to not lose you money or have it spent or anything else that could happen to it.  I personally would never be putting my money in an off shore savings account because of what I am reading here. You cant trust the bank and what the government says because clearly here they went against their prior agreement.