Spain says bank deposits “sacred” as Cypriot parliament rejects levy plan

In response to plans to make Cypriot savers foot part of the bill for a bailout of its banking system, Economy Minister Luis de Guindos on Tuesday said that bank deposits of under 100,000 euros in Spain are “sacred.”

Speaking in the Senate, De Guindos joined a growing throng of European officials in denying the authorship of the idea of imposing a tax of 6.75 percent on bank deposits of under 100,000 euros and of 9.9 percent on those above that amount. The deposit tax was approved by a meeting of euro zone finance and economy ministers early Saturday. Some 48 hours later, the Eurogroup backtracked, saying deposits of under 100,000 euros should not be subject to the levy.

After De Guindos had spoken the Cypriot parliament rejected the plan, which the government proposed to modify by exempting deposits of under 20,000 euros. Deposits above that amount and below 100,000 euros would have been subject to a tax of 6.75 percent and those above that amount to a rate of 9.9 percent.

“I’m not going to explain how the Eurogroup makes decisions,” De Guindos said. “What I will say is that the position of the Spanish government is that you have to respect deposits of under 100,000 euros; these deposits are sacred. Spanish savers should stay calm.”

De Guindos said the turbulence in the financial markets sparked by events surrounding Cyprus will not last long. “They are positive figures on the Spanish economy on exports, budget execution and the trade surplus. We’re on a positive track,” the minister said.