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Savings account seizure plan draws fury in Cyprus

  • Protesters hold up their hands as they protest outside the parliament in capital Nicosia, Cyprus, Monday, March 18, 2013. A vote on a bailout package for Cyprus that includes an immediate tax on all savings accounts has been postponed until Tuesday evening. Yiannakis Omirou, the speaker of Parliament, said the delay was needed to give the government time to amend the deal reached over the weekend that prompted an outcry from those who thought their money was safe. In order to get euro 10 billion ($13 billion) in bailout loans from international creditors, Cyprus agreed to take a percentage of all deposits — including ordinary citizens' savings — an unprecedented step in Europe's 3 ½-year debt crisis. (AP Photo/Petros Karadjias)

    Protesters hold up their hands as they protest outside the parliament in capital Nicosia, Cyprus, Monday, March 18, 2013. A vote on a bailout package for Cyprus that includes an immediate tax on all savings accounts has been postponed until Tuesday evening. Yiannakis Omirou, the speaker of Parliament, said the delay was needed to give the government time to amend the deal reached over the weekend that prompted an outcry from those who thought their money was safe. In order to get euro 10 billion ($13 billion) in bailout loans from international creditors, Cyprus agreed to take a percentage of all deposits — including ordinary citizens' savings — an unprecedented step in Europe's 3 ½-year debt crisis. (AP Photo/Petros Karadjias)

  • Cypriot President Nicos Anastasiades, left, and President of the Parliament Yiannakis Omirou walk toward the parliament following a meeting in capital Nicosia, Cyprus, Monday, March 18, 2013. Cyprus' president is briefing lawmakers ahead of a crucial parliamentary vote on a controversial levy on bank deposits that the cash-strapped country's creditors have demanded in exchange for a euro10 billion (US$13 billion) rescue package.(AP Photo/Petros Karadjias)

    Cypriot President Nicos Anastasiades, left, and President of the Parliament Yiannakis Omirou walk toward the parliament following a meeting in capital Nicosia, Cyprus, Monday, March 18, 2013. Cyprus' president is briefing lawmakers ahead of a crucial parliamentary vote on a controversial levy on bank deposits that the cash-strapped country's creditors have demanded in exchange for a euro10 billion (US$13 billion) rescue package.(AP Photo/Petros Karadjias)

  • In this image taken Saturday, March 16, 2013,  people queue to use an ATM machine outside of Bank of Cyprus branch in southern port city of Limassol, Saturday, March 16, 2013. Many rushed to cooperative banks which are open Saturdays in Cyprus after learning that the terms of a bailout deal that the cash-strapped country hammered out with international lenders includes a one-time levy on bank deposits. The move, decided in an extraordinary meeting of the finance ministers of the 17-nation eurozone in the early hours Saturday, is a major departure from established policies. Analysts have warned that making depositors take a hit threatens to undermine investors' confidence in other weaker eurozone economies and might possibly lead to bank runs. (AP Photo/Pavlos Vrionides)

    In this image taken Saturday, March 16, 2013, people queue to use an ATM machine outside of Bank of Cyprus branch in southern port city of Limassol, Saturday, March 16, 2013. Many rushed to cooperative banks which are open Saturdays in Cyprus after learning that the terms of a bailout deal that the cash-strapped country hammered out with international lenders includes a one-time levy on bank deposits. The move, decided in an extraordinary meeting of the finance ministers of the 17-nation eurozone in the early hours Saturday, is a major departure from established policies. Analysts have warned that making depositors take a hit threatens to undermine investors' confidence in other weaker eurozone economies and might possibly lead to bank runs. (AP Photo/Pavlos Vrionides)

  • A woman holds a banner during a protest outside of the parliament in Nicosia, Cyprus, Monday, March 18, 2013. A vote on a bailout package for Cyprus that includes an immediate tax on all savings accounts has been postponed until Tuesday evening. Yiannakis Omirou, the speaker of Parliament, said the delay was needed to give the government time to amend the deal reached over the weekend that prompted an outcry from those who thought their money was safe. In order to get euro 10 billion ($13 billion) in bailout loans from international creditors, Cyprus agreed to take a percentage of all deposits — including ordinary citizens' savings — an unprecedented step in Europe's 3 ½-year debt crisis. (AP Photo/Petros Karadjias)

    A woman holds a banner during a protest outside of the parliament in Nicosia, Cyprus, Monday, March 18, 2013. A vote on a bailout package for Cyprus that includes an immediate tax on all savings accounts has been postponed until Tuesday evening. Yiannakis Omirou, the speaker of Parliament, said the delay was needed to give the government time to amend the deal reached over the weekend that prompted an outcry from those who thought their money was safe. In order to get euro 10 billion ($13 billion) in bailout loans from international creditors, Cyprus agreed to take a percentage of all deposits — including ordinary citizens' savings — an unprecedented step in Europe's 3 ½-year debt crisis. (AP Photo/Petros Karadjias)

  • Children are seen by a protest banner held by  protestors outside of the parliament during a crucial meeting in capital Nicosia, Cyprus, Monday, March 18, 2013. Cyprus' president is briefing lawmakers ahead of a crucial parliamentary vote on a controversial levy on bank deposits that the cash-strapped country's creditors have demanded in exchange for a euro10 billion (US$13 billion) rescue package.(AP Photo/Petros Karadjias)

    Children are seen by a protest banner held by protestors outside of the parliament during a crucial meeting in capital Nicosia, Cyprus, Monday, March 18, 2013. Cyprus' president is briefing lawmakers ahead of a crucial parliamentary vote on a controversial levy on bank deposits that the cash-strapped country's creditors have demanded in exchange for a euro10 billion (US$13 billion) rescue package.(AP Photo/Petros Karadjias)

  • Protesters who wrote "NO" on their hands  protesting outside of the parliament in capital Nicosia, Cyprus, Monday, March 18, 2013. A vote on a bailout package for Cyprus that includes an immediate tax on all savings accounts has been postponed until Tuesday evening. Yiannakis Omirou, the speaker of Parliament, said the delay was needed to give the government time to amend the deal reached over the weekend that prompted an outcry from those who thought their money was safe. In order to get euro10 billion ($13 billion) in bailout loans from international creditors, Cyprus agreed to take a percentage of all deposits — including ordinary citizens' savings — an unprecedented step in Europe's 3 ½-year debt crisis. (AP Photo/Petros Karadjias)

    Protesters who wrote "NO" on their hands protesting outside of the parliament in capital Nicosia, Cyprus, Monday, March 18, 2013. A vote on a bailout package for Cyprus that includes an immediate tax on all savings accounts has been postponed until Tuesday evening. Yiannakis Omirou, the speaker of Parliament, said the delay was needed to give the government time to amend the deal reached over the weekend that prompted an outcry from those who thought their money was safe. In order to get euro10 billion ($13 billion) in bailout loans from international creditors, Cyprus agreed to take a percentage of all deposits — including ordinary citizens' savings — an unprecedented step in Europe's 3 ½-year debt crisis. (AP Photo/Petros Karadjias)

  • Protesters shout slogans during a protest outside of the parliament in Nicosia, Cyprus, Monday, March 18, 2013. A vote on a bailout package for Cyprus that includes an immediate tax on all savings accounts has been postponed until Tuesday evening. Yiannakis Omirou, the speaker of Parliament, said the delay was needed to give the government time to amend the deal reached over the weekend that prompted an outcry from those who thought their money was safe. In order to get euro 10 billion ($13 billion) in bailout loans from international creditors, Cyprus agreed to take a percentage of all deposits — including ordinary citizens' savings — an unprecedented step in Europe's 3 ½-year debt crisis. (AP Photo/Petros Karadjias)

    Protesters shout slogans during a protest outside of the parliament in Nicosia, Cyprus, Monday, March 18, 2013. A vote on a bailout package for Cyprus that includes an immediate tax on all savings accounts has been postponed until Tuesday evening. Yiannakis Omirou, the speaker of Parliament, said the delay was needed to give the government time to amend the deal reached over the weekend that prompted an outcry from those who thought their money was safe. In order to get euro 10 billion ($13 billion) in bailout loans from international creditors, Cyprus agreed to take a percentage of all deposits — including ordinary citizens' savings — an unprecedented step in Europe's 3 ½-year debt crisis. (AP Photo/Petros Karadjias)

  • A protestor with a mask of German Chancellor Angela Merkel shout slogans during a protest outside of the parliament in capital Nicosia, Cyprus, Monday, March 18, 2013. A vote on a bailout package for Cyprus that includes an immediate tax on all savings accounts has been postponed until Tuesday evening. Yiannakis Omirou, the speaker of Parliament, said the delay was needed to give the government time to amend the deal reached over the weekend that prompted an outcry from those who thought their money was safe. In order to get euro 10 billion ($13 billion) in bailout loans from international creditors, Cyprus agreed to take a percentage of all deposits — including ordinary citizens' savings — an unprecedented step in Europe's over 3 year debt crisis. (AP Photo/Petros Karadjias)

    A protestor with a mask of German Chancellor Angela Merkel shout slogans during a protest outside of the parliament in capital Nicosia, Cyprus, Monday, March 18, 2013. A vote on a bailout package for Cyprus that includes an immediate tax on all savings accounts has been postponed until Tuesday evening. Yiannakis Omirou, the speaker of Parliament, said the delay was needed to give the government time to amend the deal reached over the weekend that prompted an outcry from those who thought their money was safe. In order to get euro 10 billion ($13 billion) in bailout loans from international creditors, Cyprus agreed to take a percentage of all deposits — including ordinary citizens' savings — an unprecedented step in Europe's over 3 year debt crisis. (AP Photo/Petros Karadjias)

  • A police officer stands by a protest banner outside of parliament before a meeting in capital Nicosia, Cyprus, Monday, March 18, 2013. Cyprus' president is briefing lawmakers ahead of a crucial parliamentary vote on a controversial levy on bank deposits that the cash-strapped country's creditors have demanded in exchange for a euro10 billion ($13 billion) rescue package.(AP Photo/Petros Karadjias)

    A police officer stands by a protest banner outside of parliament before a meeting in capital Nicosia, Cyprus, Monday, March 18, 2013. Cyprus' president is briefing lawmakers ahead of a crucial parliamentary vote on a controversial levy on bank deposits that the cash-strapped country's creditors have demanded in exchange for a euro10 billion ($13 billion) rescue package.(AP Photo/Petros Karadjias)

  • A protestor with a mask of German Chancellor Angela Merkel shout slogans during a protest outside of the parliament in capital Nicosia, Cyprus, Monday, March 18, 2013. A vote on a bailout package for Cyprus that includes an immediate tax on all savings accounts has been postponed until Tuesday evening. Yiannakis Omirou, the speaker of Parliament, said the delay was needed to give the government time to amend the deal reached over the weekend that prompted an outcry from those who thought their money was safe. In order to get euro10 billion (US$13 billion) in bailout loans from international creditors, Cyprus agreed to take a percentage of all deposits — including ordinary citizens' savings — an unprecedented step in Europe's 3 -year debt crisis. (AP Photo/Petros Karadjias)

    A protestor with a mask of German Chancellor Angela Merkel shout slogans during a protest outside of the parliament in capital Nicosia, Cyprus, Monday, March 18, 2013. A vote on a bailout package for Cyprus that includes an immediate tax on all savings accounts has been postponed until Tuesday evening. Yiannakis Omirou, the speaker of Parliament, said the delay was needed to give the government time to amend the deal reached over the weekend that prompted an outcry from those who thought their money was safe. In order to get euro10 billion (US$13 billion) in bailout loans from international creditors, Cyprus agreed to take a percentage of all deposits — including ordinary citizens' savings — an unprecedented step in Europe's 3 -year debt crisis. (AP Photo/Petros Karadjias)

  • German Finance Minister Wolfgang Schaeuble addresses a news conference at the Finance Ministry Berlin, Germany, Monday, March 18, 2013. Schaeuble said it is up to Cyprus to decide how a controversial levy on bank deposits is structured. (AP Photo/Markus Schreiber)

    German Finance Minister Wolfgang Schaeuble addresses a news conference at the Finance Ministry Berlin, Germany, Monday, March 18, 2013. Schaeuble said it is up to Cyprus to decide how a controversial levy on bank deposits is structured. (AP Photo/Markus Schreiber)

  • A police officer stands on duty  behind  protest banners outside of parliament before a meeting in capital Nicosia, Cyprus, Monday, March 18, 2013. Cyprus' president is briefing lawmakers ahead of a crucial parliamentary vote on a controversial levy on bank deposits that the cash-strapped country's creditors have demanded in exchange for a euro10 billion (US$13 billion) rescue package.(AP Photo/Petros Karadjias)

    A police officer stands on duty behind protest banners outside of parliament before a meeting in capital Nicosia, Cyprus, Monday, March 18, 2013. Cyprus' president is briefing lawmakers ahead of a crucial parliamentary vote on a controversial levy on bank deposits that the cash-strapped country's creditors have demanded in exchange for a euro10 billion (US$13 billion) rescue package.(AP Photo/Petros Karadjias)

  • A view of the Bank of Cyprus UK in Charlotte Street, central London, Monday, March 18, 2013.  The euro 10 billion (US dlrs13 billion) Cyprus bailout agreed by the EU and IMF demands that all bank customers pay a one-off levy on all bank deposits, to save the country from bankruptcy.  Cyprus' president Nicos Anastasiades urged lawmakers to approve the tax when they vote Monday, saying he wants to amend the unpopular eurozone bailout plan to reduce its effect on small savers.  (AP Photo / Nick Ansell, PA) UNITED KINGDOM OUT - NO SALES - NO ARCHIVES

    A view of the Bank of Cyprus UK in Charlotte Street, central London, Monday, March 18, 2013. The euro 10 billion (US dlrs13 billion) Cyprus bailout agreed by the EU and IMF demands that all bank customers pay a one-off levy on all bank deposits, to save the country from bankruptcy. Cyprus' president Nicos Anastasiades urged lawmakers to approve the tax when they vote Monday, saying he wants to amend the unpopular eurozone bailout plan to reduce its effect on small savers. (AP Photo / Nick Ansell, PA) UNITED KINGDOM OUT - NO SALES - NO ARCHIVES

  • Protesters hold up their hands as they protest outside the parliament in capital Nicosia, Cyprus, Monday, March 18, 2013. A vote on a bailout package for Cyprus that includes an immediate tax on all savings accounts has been postponed until Tuesday evening. Yiannakis Omirou, the speaker of Parliament, said the delay was needed to give the government time to amend the deal reached over the weekend that prompted an outcry from those who thought their money was safe. In order to get euro 10 billion ($13 billion) in bailout loans from international creditors, Cyprus agreed to take a percentage of all deposits — including ordinary citizens' savings — an unprecedented step in Europe's 3 ½-year debt crisis. (AP Photo/Petros Karadjias)
  • Cypriot President Nicos Anastasiades, left, and President of the Parliament Yiannakis Omirou walk toward the parliament following a meeting in capital Nicosia, Cyprus, Monday, March 18, 2013. Cyprus' president is briefing lawmakers ahead of a crucial parliamentary vote on a controversial levy on bank deposits that the cash-strapped country's creditors have demanded in exchange for a euro10 billion (US$13 billion) rescue package.(AP Photo/Petros Karadjias)
  • In this image taken Saturday, March 16, 2013,  people queue to use an ATM machine outside of Bank of Cyprus branch in southern port city of Limassol, Saturday, March 16, 2013. Many rushed to cooperative banks which are open Saturdays in Cyprus after learning that the terms of a bailout deal that the cash-strapped country hammered out with international lenders includes a one-time levy on bank deposits. The move, decided in an extraordinary meeting of the finance ministers of the 17-nation eurozone in the early hours Saturday, is a major departure from established policies. Analysts have warned that making depositors take a hit threatens to undermine investors' confidence in other weaker eurozone economies and might possibly lead to bank runs. (AP Photo/Pavlos Vrionides)
  • A woman holds a banner during a protest outside of the parliament in Nicosia, Cyprus, Monday, March 18, 2013. A vote on a bailout package for Cyprus that includes an immediate tax on all savings accounts has been postponed until Tuesday evening. Yiannakis Omirou, the speaker of Parliament, said the delay was needed to give the government time to amend the deal reached over the weekend that prompted an outcry from those who thought their money was safe. In order to get euro 10 billion ($13 billion) in bailout loans from international creditors, Cyprus agreed to take a percentage of all deposits — including ordinary citizens' savings — an unprecedented step in Europe's 3 ½-year debt crisis. (AP Photo/Petros Karadjias)
  • Children are seen by a protest banner held by  protestors outside of the parliament during a crucial meeting in capital Nicosia, Cyprus, Monday, March 18, 2013. Cyprus' president is briefing lawmakers ahead of a crucial parliamentary vote on a controversial levy on bank deposits that the cash-strapped country's creditors have demanded in exchange for a euro10 billion (US$13 billion) rescue package.(AP Photo/Petros Karadjias)
  • Protesters who wrote "NO" on their hands  protesting outside of the parliament in capital Nicosia, Cyprus, Monday, March 18, 2013. A vote on a bailout package for Cyprus that includes an immediate tax on all savings accounts has been postponed until Tuesday evening. Yiannakis Omirou, the speaker of Parliament, said the delay was needed to give the government time to amend the deal reached over the weekend that prompted an outcry from those who thought their money was safe. In order to get euro10 billion ($13 billion) in bailout loans from international creditors, Cyprus agreed to take a percentage of all deposits — including ordinary citizens' savings — an unprecedented step in Europe's 3 ½-year debt crisis. (AP Photo/Petros Karadjias)
  • Protesters shout slogans during a protest outside of the parliament in Nicosia, Cyprus, Monday, March 18, 2013. A vote on a bailout package for Cyprus that includes an immediate tax on all savings accounts has been postponed until Tuesday evening. Yiannakis Omirou, the speaker of Parliament, said the delay was needed to give the government time to amend the deal reached over the weekend that prompted an outcry from those who thought their money was safe. In order to get euro 10 billion ($13 billion) in bailout loans from international creditors, Cyprus agreed to take a percentage of all deposits — including ordinary citizens' savings — an unprecedented step in Europe's 3 ½-year debt crisis. (AP Photo/Petros Karadjias)
  • A protestor with a mask of German Chancellor Angela Merkel shout slogans during a protest outside of the parliament in capital Nicosia, Cyprus, Monday, March 18, 2013. A vote on a bailout package for Cyprus that includes an immediate tax on all savings accounts has been postponed until Tuesday evening. Yiannakis Omirou, the speaker of Parliament, said the delay was needed to give the government time to amend the deal reached over the weekend that prompted an outcry from those who thought their money was safe. In order to get euro 10 billion ($13 billion) in bailout loans from international creditors, Cyprus agreed to take a percentage of all deposits — including ordinary citizens' savings — an unprecedented step in Europe's over 3 year debt crisis. (AP Photo/Petros Karadjias)
  • A police officer stands by a protest banner outside of parliament before a meeting in capital Nicosia, Cyprus, Monday, March 18, 2013. Cyprus' president is briefing lawmakers ahead of a crucial parliamentary vote on a controversial levy on bank deposits that the cash-strapped country's creditors have demanded in exchange for a euro10 billion ($13 billion) rescue package.(AP Photo/Petros Karadjias)
  • A protestor with a mask of German Chancellor Angela Merkel shout slogans during a protest outside of the parliament in capital Nicosia, Cyprus, Monday, March 18, 2013. A vote on a bailout package for Cyprus that includes an immediate tax on all savings accounts has been postponed until Tuesday evening. Yiannakis Omirou, the speaker of Parliament, said the delay was needed to give the government time to amend the deal reached over the weekend that prompted an outcry from those who thought their money was safe. In order to get euro10 billion (US$13 billion) in bailout loans from international creditors, Cyprus agreed to take a percentage of all deposits — including ordinary citizens' savings — an unprecedented step in Europe's 3 -year debt crisis. (AP Photo/Petros Karadjias)
  • German Finance Minister Wolfgang Schaeuble addresses a news conference at the Finance Ministry Berlin, Germany, Monday, March 18, 2013. Schaeuble said it is up to Cyprus to decide how a controversial levy on bank deposits is structured. (AP Photo/Markus Schreiber)
  • A police officer stands on duty  behind  protest banners outside of parliament before a meeting in capital Nicosia, Cyprus, Monday, March 18, 2013. Cyprus' president is briefing lawmakers ahead of a crucial parliamentary vote on a controversial levy on bank deposits that the cash-strapped country's creditors have demanded in exchange for a euro10 billion (US$13 billion) rescue package.(AP Photo/Petros Karadjias)
  • A view of the Bank of Cyprus UK in Charlotte Street, central London, Monday, March 18, 2013.  The euro 10 billion (US dlrs13 billion) Cyprus bailout agreed by the EU and IMF demands that all bank customers pay a one-off levy on all bank deposits, to save the country from bankruptcy.  Cyprus' president Nicos Anastasiades urged lawmakers to approve the tax when they vote Monday, saying he wants to amend the unpopular eurozone bailout plan to reduce its effect on small savers.  (AP Photo / Nick Ansell, PA) UNITED KINGDOM OUT - NO SALES - NO ARCHIVES

A plan to seize up to 10 percent of savings accounts in Cyprus to help pay for a $20.4 billion financial bailout was met with fury yesterday, and the government shut down banks until later this week while lawmakers wrangled over how to keep the island nation from bankruptcy.

Though the euro and stock prices of European banks fell, global financial markets largely remained calm, and there was little sense that bank account holders elsewhere across the continent faced similar risk.

Political leaders in Cyprus scrambled to devise a new plan that would not be so burdensome for people with less than $129,290 in the bank.

The authorities delayed a parliamentary vote on the seizure of $7.5 billion and ordered banks to remain shut until Thursday while they try to modify the deal, which must be approved by other eurozone governments. Once a deal is in place, they will be ready to lend Cyprus $13 billion in rescue loans.

A rejection of the package could see the country go bankrupt and possibly drop out of the euro currency – an outcome that would be even more damaging to financial markets’ confidence.

Even while playing down the chance of fresh market turmoil, experts warned that the surprise move broke an important taboo against making depositors pay for Europe’s bailouts. As a result, it may have longer-term consequences for confidence in Europe’s banking system – and its ability to end its financial crisis.

“It’s a precedent for all European countries. Their money in every bank is not safe,” said lawyer Simos Angelides at an angry protest outside parliament in Cyprus’s capital, Nicosia, where people chanted, “Thieves, thieves!”

Eurozone finance ministers held a telephone conference last night, and concluded that small depositors should not be hit as hard as others. They said the Cypriot authorities will stagger the deposit seizures more, but they remained firm in demanding that the overall sum of money raised by the seizures remain the same.

In the short term, there was little sign of a new explosion in the European financial crisis. Stock markets dropped in early hours but stabilized by the close. The Dow Jones industrial average fell 62.05 points, or 0.4 percent, to 14,452.06 yesterday. The euro fell 0.6 percent – a bad day, but hardly a token of impending doom. Government bond prices for Italy and Spain were roughly unchanged, suggesting that investors do not expect the market trouble to spread beyond Cyprus for now.

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