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As the proposal currently stands, the majority of international banks and institutional investors who lent money to Cypriot banks and government will not suffer losses, and large mainly non-Cypriot depositors will suffer only limited losses, despite the fact that they benefited from no guarantee above €100,000. But private individuals who deposited their savings in Cyprus’s banks will suffer losses, despite being promised a State-backed deposit guarantee.
Thierry Philipponnat, Secretary General of Finance Watch, said: "Making ordinary citizens pay for the mistakes of professional financiers and violating the spirit, if not the letter, of the regulation protecting deposits is not the way for EU leaders to solve a financial crisis". Policy-makers must honour deposit guarantees or risk undermining public trust in the banking system."
In this context, Finance Watch urges European legislators to ensure that their proposals on Bank Recovery and Resolution (BRR) are strong in design and application.
Report on Bank Recovery and Resolution (BRR)