Cyprus banks will remain closed until Thursday to prevent a run on accounts as the Mediterranean island nation considers imposing a first-ever bank deposit tax.
The proposed bank levy has rattled investors. Stock markets throughout the world dropped Monday in the aftermath of the bailout for tiny Cyprus. Stocks in Asia plunged two percent or more, with European and U.S. indexes falling by smaller amounts.
The proposed bank tax would hit everyone with money in Cypriot banks, including foreign nationals.
Cyprus moved to revamp terms of the bank deposit tax imposed by its international lenders as part of a $13 billion bailout to keep from going bankrupt.
Cypriot officials were working with the lenders to cut or eliminate the tax on small investors, while raising it on those with bigger accounts. For the second day in a row, Cyprus’s parliament postponed a vote on a new plan and rescheduled it for Tuesday.
“We cleaning ladies spend our entire days trying to earn some money in order to feed our children, and now they are saying they are going to take it from us?” one woman said. “It’s unacceptable. No. Not a single haircut, we will not accept any kind of haircut.”
Under bailout terms set Saturday by Cyprus’s eurozone neighbors and the International Monetary Fund, a one-time tax of 9.9 percent would be imposed on deposits of $131,000 and up, while deposits under $131,000 would be taxed at 6.75 percent.
Russian President Vladimir Putin on Monday called the proposed levy “unfair, unprofessional and dangerous.” Russian banks and corporations have billions of dollars in Cypriot banks.
Cypriot media say it is unlikely lawmakers will agree to the terms set in the bailout.
President Nicos Anastasiades said in a televised address to the nation Sunday if parliament does not approve the levy, Cyprus faces bankruptcy and the possible exit of Cyprus from the eurozone.