Spain said European Union law guarantees bank deposits of as much as 100,000 euros ($129,000), seeking to reassure savers in the euro area’s fourth-largest economy before Cyprus rejected a proposed levy that caused a public backlash.
“Deposit holders in Spain can be absolutely assured that not only is this a specific, concrete and unique situation in Cyprus, but all deposits of less than 100,000 euros are perfectly guaranteed in Cyprus, in Spain and in the whole of the European Union,” Economy Minister Luis de Guindos told reporters at the Spanish senate in Madrid yesterday.
While Cyprus’s exit from the single currency “is not on the table for anyone,” it must make a decision on its bailout because its banks are dependent on European Central Bank liquidity, de Guindos said. Less than two hours after his remarks, Cyprus’s parliament rejected the tax on deposits imposed by euro region peers as part of its bailout.
De Guindos is trying to ease concern among Spanish savers that the terms of the Cypriot rescue signal their savings may also be at risk if the government opts to request its own sovereign rescue. Prime Minister Mariano Rajoy hasn’t ruled out calling for European aid.
“The euro group’s position following European law is that deposits of up to 100,000 euros are absolutely guaranteed and are sacred,” de Guindos said.
The euro group backtracked on a March 15 decision to impose a levy of 6.75 percent on deposits of less than 100,000 euros and 9.9 percent above that amid pressure from ECB President Mario Draghi and from Spain, de Guindos said. “You’ll understand I’m not going to comment on how euro group decisions are taken.”
The euro group has fixed the banks’ contribution to the bailout at 5.8 billion euros while leaving the government of Cyprus to decide on the structure of the rates of the established tax, the minister said.
“What was done was a burden sharing,” de Guindos said. “In all countries when there is a situation of aid, a difficult situation with banks, the burden is shared.”