Mar 19, 2013

By Scott Walker

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Political leaders in Cyprus have revised a plan that would have taxed bank accounts as part of a plan to keep the island nation from bankruptcy.

A plan to seize up to 10 per cent of savings accounts to help pay for a 21-billion dollar bailout has been met with fury, and the government has shut down banks until Thursday.

The revised plan would see a 6.75% levy on accounts between $26,000 and $132,000 dollars.

Higher amounts would be subject to a 9.9 per cent charge.

That plan is still likely to cause outrage among foreign depositors. TD-Waterhouse financial analyst Kim Parlee says a third of the deposits in Cypriot banks are from oversees, much of it from Russia. She says the  bank deposits are eight times as large as the island’s GDP.

Much of the overseas money is from Russia. Depositors reportedly include President Vladimir Putin, who has condemned the tax.

Global stock markets retreated because of the potential impact of the Cypriot actions on the Eurozone. But markets are taking the situation more in stride this morning.

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