The fate of the troubled European countries whose debt-ridden and unsustainable economies have been in the doldrums ever since the financial crisis began in 2008 is of equal interest today as it was during the bank runs of five years ago.
Greece has experienced financial meltdown and the situation is so critical that it may signal a future of over 50% unemployment for the current working generation. This is a grave enough situation for the International Monetary Fund, which has thus far been relied upon for a solution as the southern European region becomes increasingly welfare-dependant and less willing to kick-start its industries.
Rather more surprising is Cyprus’s dire financial situation, which resulted in a deal being brokered with the International Monetary Fund to secure a helping hand amounting to an enormous 8.7 billion Sterling. This could be considered disproportionately large when considering Cyprus’s small size, previously self-sufficient population and relative wealth since becoming an independent country in 1960.
The point of particular interest here is that the island’s economy has benefited from a large number of forex and binary options companies establishing themselves in Cyprus since the inception of the Cypriot regulator CySEC’s regulation of binary options companies. This not only brought employment to the island, where Limassol, one of the largest cities in Cyprus has become a veritable “silicon valley” of online trading companies, but also revenue to the government in the form of corporation tax and leasing of office space.
This whole event is likely to cause concern over depositing with Cypriot brokers, as one of the conditions of the deal is that a levy has been imposed upon bank deposits intended ensure investors contribute to the bailout and shoulder some of the responsibility of restoring a financial status quo.
There are a lot of Russian deposits in the Cypriot banking system, according to economists.
Jacob Funk Kirkegaard, of the US-based Peterson Institute for International Economics, said that was a potential problem for any bailout negotiations.
“There is a general political sentiment that it is not acceptable to be bailing out a country, and thereby putting European taxpayers’ money at risk, to basically protect Russian depositors in Cypriot banks,” he said.
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The Cypriot economy accounts for barely 0.2% of the eurozone’s overall output. But there is concern within the euro bloc that a default by Cyprus risks undermining the progress being made in Greece.
It will be no doubt of great interest to follow the developments of this as to be aware of the potential consequences of doing business with Cyprus-based brokers.
(Update: Official releases are starting to be published by companies, and as this develops we are gathering further industry-wide information however as detailed in the following statement with regard to the corporate policy of Banc De Binary on this matter, this particular company is going to absorb the cost of the levy.)
Earlier today, the Cypriot authorities and the EU-IMF agreed to impose a one-off bank tax on deposits in Cyprus as part of a wider economic rescue programme.
Banc De Binary assures its clients that it will absorb any costs caused by the one-off bank deposit tax in Cyprus, and that all our client accounts and balances will be unaffected by the decision.
Your deposits are in safe hands, and we take this opportunity to thank our clients for their continued trust in our services and reputation.
Deposits in accounts outside Cyprus are not affected in any way.
Please do not hesitate to contact Customer Support if you have any questions or need additional information.
Banc De Binary Management