Tags: Medvedev | Cyprus | bank | tax

Medvedev: Cyprus Bank Tax Proposal ‘Undermines Trust in Financial Institutions’

By Dan Weil   |   Wednesday, 20 Mar 2013 03:22 PM

Russian Prime Minister Dmitry Medvedev laid into the European Union and Cyprus for their agreement to tax Cypriot bank deposits as a means to pay for a bailout from the European Union, the European Central Bank and the International Monetary Fund.

The move, rejected by the Cyprus parliament Tuesday, was reminiscent of what went on in Soviet days, Medvedev told reporters Wednesday, according to the Financial Times.

“The measure that was proposed is of a confiscation nature and unprecedented in its character,” he said.

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“I can’t compare it with anything but . . .  decisions made by Soviet authorities . . . when they didn’t think much about the savings of their population. But we are living in the 21st century, under market economic conditions.”

The European Union and Cyprus have acted “like an elephant in a China shop,” Medvedev said. “All possible mistakes that could be made have been made by them.”

He sees the risk of contagion in the Cyprus crisis, saying the bailout agreement threatens “to undermine trust in financial institutions as a whole,” going beyond the island nation.

Cyprus is now seeking loans from Russia. Some Russian oligarchs have deposits in Cyprus, and there is talk the Russians use those accounts for money laundering.

Laurence Fink, CEO of BlackRock, isn’t quite as worked up as Medvedev.

Cyprus “has some symbolism impact on Europe, but it’s not a really major economic issue,” he told Bloomberg. “It does remind us of the frailty of Europe. It does remind us that the European fix will be multiple years.”

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