Cyprus Banking System: a guinea pig of the Bail-In approach

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Cyprus Banking SystemCyprus was the first country where the EU bureaucrats tested a new approach on saving a banking system and an economy – Bailing-In. The intention was to show the other EU countries like Italy and Spain what to expect if those countries will apply for EU support. Bailing-In was used for the first time in the EU as a result of the negative attitude of EU taxpayers which did not want any more use of taxpayer funds to save failed banks and nations. About €592bn was spent on Bailing-Out in the EU during 2008 – 2012.
Bailing-In Cyprus Banking system and economy
Bailing-In was a blow to the Cyprus banking system and economy. Cyprus had requested only €10bn while the EU had spent about €110bn on Greece. Cyprus was in trouble only after ‘the haircut’ on the Greek bond, enforced by the EU. According to the Economist, there are three lessons to be learnt from the Cyprus banking crisis and the Baling-In as the following:
‘Bad loans’ are to be passed to state controlled banks to avoid distress selling of assets in trouble,
A raid on uninsured deposits (only €100k is insured in the EU) is destroying public trust in banking system,
A universal template can’t be used as all banking crisis are different from a systematic to a localised one,
Regarding all odds the Cyprus banking sector and the economy as a whole is showing more resilience to the 2013 crisis. Despite the difficulties and hardship that Cyprus Banking System and Cyprus economy suffered from bail-in, Cyprus is a popular jurisdiction for offshore company registration and opening offshore bank account. The Cyprus banking system and economy have a lot to offer:
The Cyprus corporate tax rate is only 12.5%,
No Capital Gains Tax (CGT) with an exception to a Cyprus base property,
No tax on transactions with securities,
No withholding tax on interest, dividends, royalties,
No controlled foreign entity rule (CFC) which allow untaxed consolidation of overseas income, etc.
Cost and maintenance of Cyprus offshore companies has dropped substantially and is now close to those of tax heavens. It is still possible to open a bank account in Cyprus remotely. Please find the following services Eltoma Corporate Services have to offer in regard to Cyprus banking system: Opening a bank account in Cyprus